BLBG:Oil Declines a Second Day as U.S. Stockpiles, Europe Counter Iran Threat
Oil fell for a second day, trimming a weekly gain, as increasing U.S. crude stockpiles and signs that Europe’s sovereign debt crisis is worsening pointed to faltering demand for fuel.
Futures slid as much as 0.5 percent in New York after dropping 1.4 percent yesterday. U.S. crude inventories climbed 2.2 million barrels (DOESCRUD) last week, the Energy Department said. Analysts forecast a decline of 1 million barrels in a Bloomberg News survey. Borrowing costs rose in France’s first bond auction of the year and Hungary’s one-year bill yield climbed to the highest level since 2009. Oil has gained 2.7 percent this week on concern that sanctions against Iran will curb supplies.
“The bigger issues are the geopolitical crisis with Iran and the European debt crisis, pushing and pulling against the market,” said Anthony Nunan, a senior adviser for risk management at Mitsubishi Corp. in Tokyo who described the Energy Department data as bearish. “We had an overreaction to the upside and people are coming back to the reality that the European crisis will still be a big drag on the economy.”
Crude for February delivery slid as much as 50 cents to $101.31 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.49 at 1:13 p.m. Sydney time. The contract yesterday fell 1.4 percent to $101.81, the lowest close since Dec. 30. Prices gained 8.2 percent in 2011.
Brent oil for February settlement fell 0.4 percent to $112.35 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate futures was at $10.86, compared with $10.93 yesterday and a record of $27.88 on Oct. 14.
Iran Sanctions
London-traded Brent’s premium has risen from $7.93 on Dec. 27 as tension has increased over sanctions aimed at curbing Iran’s nuclear program. The Middle East producer threatened to retaliate by shutting the Strait of Hormuz, a transit route for a fifth of the world’s crude.
Italian Prime Minister Mario Monti yesterday questioned the scope and timing of possible European Union sanctions against Iran, raising an obstacle to stiffer penalties on the Persian Gulf nation.
The European Union is continuing to work on its plan to halt oil purchases from Iran, U.S. State Department spokeswoman Victoria Nuland said. EU foreign ministers aim to announce harsher penalties on the nation’s energy and banking industries at their next meeting on Jan. 30, according to EU spokesman Michael Mann.
Shooting Star
Oil in New York may fall next week on speculation Iran won’t block the Strait of Hormuz and concern that Europe will struggle to contain its debt crisis, a Bloomberg News survey showed. Fifteen of 32 analysts, or 47 percent, forecast prices will decrease through Jan. 13. Fourteen said prices will rise.
West Texas Intermediate futures may extend their decline as price movements this week have created a “shooting star” on the candlestick chart, a bearish formation, according to data compiled by Bloomberg. Stochastic oscillators also remain above 70, signaling futures are overbought.
U.S. gasoline stockpiles gained 2.48 million barrels in the seven days ended Dec. 30, the Energy Department data also showed. They were forecast (DOEASMGS) to climb 1 million barrels, according to the median of 13 analyst estimates in the Bloomberg News survey. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 3.22 million barrels (DOESDIST) compared with an estimate for a 1 million barrel increase.
In Europe, gasoline supplies (ARASGSLN) in independent storage climbed to the highest level in almost six months at the Amsterdam- Rotterdam-Antwerp oil-trading hub, according to PJK International BV, a researcher in Breda, The Netherlands. They rose 14 percent to 706,000 metric tons in the week ended yesterday, the most since July 14, PJK said.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
