BLBG:Oil Trades Near One-Week High as U.S. Crude Stockpiles Drop Most in Decade
Oil traded near the highest in more than a week as the biggest drop in U.S. crude inventories in a decade countered concern that Europe’s debt crisis will worsen.
Futures were little changed after gaining 1.5 percent yesterday as Energy Department data showed stockpiles fell 10.6 million barrels, the largest decrease by volume since February 2001. European Central Bank efforts to increase lending underscored the difficulties facing euro-region banks. New York oil will average a record $100 a barrel next year as the U.S. avoids recession, while London-traded Brent will decline from the 2011 mean, according to a Bloomberg News survey of analysts.
“It was a very large drawdown,” said Jonathan Barratt, a managing director at Commodity Broking Services Pty in Sydney who predicts New York oil may climb as high as $103.40 before the end of the year. The drop in stockpiles “is lending support to the fact that the market is expecting the recovery to gain momentum,” he said
Crude for February delivery was at $98.92 a barrel, up 25 cents, in electronic trading on the New York Mercantile Exchange at 2:22 p.m. Sydney time. The contract yesterday increased $1.43 to $98.67, the highest close since Dec. 13. Prices are 8.3 percent higher this year after climbing 15 percent in 2010.
Brent oil for February settlement was at $107.75 a barrel, up 4 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate futures was at $8.83, compared with $9.04 yesterday and a record $27.88 on Oct. 14.
Record Oil
West Texas Intermediate oil will reach an average of $100 a barrel in 2012, based on the median of 27 analyst estimates compiled by Bloomberg, topping the all-time high of $99.75 set in 2008. The benchmark grade is on course to average $95 a barrel this year. Brent will average $109, compared with $110.98 so far this year, a survey of 28 analysts showed.
U.S. crude stockpiles were forecast to decrease 2.13 million barrels last week, according to a Bloomberg News survey. They shrank as refiners cut holdings and reduced imports before Jan. 1, when Texas and Louisiana assess taxes based on the fair- market value of inventories. Overseas purchases dropped to 7.58 million barrels a day, the lowest since September 2008, according to the Energy Department report.
Stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate futures, slid 990,000 barrels to 30.2 million, the report showed.
Europe Lending
Oil pared its gains as stocks fell on renewed concern that Europe will struggle to tame its debt crisis. The ECB said yesterday that 523 euro-area lenders took a record 489 billion euros ($638 billion) of funds, while Greece’s creditors are said to resist pressure from the International Monetary Fund to accept bigger losses on their holdings.
The MSCI Asia Pacific Index slipped 0.6 percent at 12:25 p.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed after the gauge completed its biggest two-day increase in almost three weeks.
Oil is up 25 percent this quarter, the biggest gain since the second quarter of 2009, as the European Union and the U.S. seek support from the Middle East and Asia for sanctions against Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries.
Iran Talks
EU nations, the U.S. and Asia-Pacific allies discussed possible measures in Rome on Dec. 20 and vowed to increase pressure on Iran to abandon a suspected nuclear weapons program, according to an Italian Foreign Ministry statement.
The U.S. sent high-ranking officials to Saudi Arabia and Israel to discuss targeting Iran’s energy exports and is developing plans to implement sanctions on its central bank that complicate international purchases of crude. It is also urging Japan, the second-biggest buyer of Iran’s oil, to reduce its reliance on imports from the country, according to diplomats and analysts who are in consultation with the Obama administration.
Iran pumped about 5 percent of the world’s oil last year, according to BP Plc’s annual Statistical Review of World Energy. It also borders the Strait of Hormuz, the sea channel through which about 15.5 million barrels a day, or a sixth of global shipments, are transported, the U.S. Energy Information Administration says on its website.
Oil may extend its rally in New York as futures approach a “golden cross” formation on the daily technical chart, according to data compiled by Bloomberg. The 50-day moving average, at $95.41 a barrel today, has pared a discount to the 200-day mean to 32 cents, the smallest since Aug. 11. Investors typically buy contracts when a shorter-term moving average crosses above a longer-term one.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
