BLBG:Oil Rebounds From One-Week Low on Supply; Heads for Weekly Drop
Oil rebounded from the lowest close in a week in New York, paring a weekly decline, on speculation that supplies may tighten amid tension with Iran and increasing economic optimism in the U.S.
Futures advanced as much as 0.4 percent after falling 1.8 percent yesterday. The International Energy Agency said it isn’t planning a release of emergency oil stockpiles after prices gained on concern Middle East shipments will be disrupted. The number of Americans saying the U.S. economy is improving climbed to the highest level since 2004, according to a survey. Prices are down this week after reports showed a drop in U.S. gasoline consumption and manufacturing contractions in Europe and China.
The IEA announcement “would certainly have had an impact in the short term,” said David Lennox, a resources analyst at Fat Prophets in Sydney. “There’s still no doubt that there is a risk premium. We’re not expecting the price of crude to move solidly higher until such time as we see a sustained improvement in U.S. petroleum usage.”
Oil for May delivery rose as much as 40 cents to $105.75 a barrel in electronic trading on the New York Mercantile Exchange and was at $105.63 at 12:54 p.m. Tokyo time. It slid $1.92 yesterday to $105.35, the lowest close since March 15. Prices are down 1.3 percent this week and 6.9 percent higher this year.
Brent oil for May settlement gained 25 cents to $123.39 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $17.79.
No Release Planned
The IEA isn’t planning a coordinated release of crude reserves among its 28 member nations and it is premature to speculate about “unconfirmed rumors” regarding releases by individual members, Executive Director Maria van der Hoeven said yesterday in an e-mailed statement during an official visit to New Delhi.
French Industry Minister Eric Besson said March 21 that releasing some strategic oil stockpile is “one option” being considered to counter rising crude prices.
Iran has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil, in response to Western sanctions on its petroleum exports aimed at halting its nuclear program.
Thirty-four percent of respondents to Bloomberg’s monthly consumer expectations survey said the economy was improving, the largest share since January 2004. A euro-area composite index based on a survey of purchasing managers in services and manufacturing industries dropped to 48.7 for March from 49.3. A similar measure of Chinese manufacturing by HSBC Holdings Plc and Markit Economic yesterday slid to 48.1. A reading below 50 indicates contraction.
Gasoline demand in the U.S. slid for the third week in four in the seven days ended March 16, an Energy Department report showed this week.
Oil may decrease next week due to the dip in U.S. fuel consumption and Saudi Arabian Oil Minister Ali al-Naimi’s remarks last week that the kingdom can increase output immediately, a Bloomberg News survey showed.
Seventeen of 30 analysts, or 57 percent, forecast oil will fall through March 30.
To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
