BLBG:Oil Falls a Second Day on Supply as Fed May Halt Stimulus
Oil dropped for a second day amid rising crude stockpiles and speculation the Federal Reserve may refrain from more monetary stimulus to boost the U.S. economy.
Futures slipped as much as 1.2 percent in New York, extending yesterday’s drop. An American Petroleum Institute inventory report after the market closed showed an increase in crude supplies three times larger than analysts expect a separate report from the Energy Department to show later today. Federal Reserve minutes from a March policy meeting showed it plans to hold off from increasing monetary accommodation unless economic expansion falters.
“I don’t think we really have a problem with supply right now,” said Sintje Boie, an analyst at HSH Nordbank in Hamburg who predicts Brent crude will stay at about $120 a barrel until the middle of the year. “We’ll only see oil prices between $130 and $150 if there’s an escalation in the conflict with Iran. But I think we’ll get some kind of diplomatic solution.”
Oil for May delivery declined as much as $1.29 to $102.72 a barrel in electronic trading on the New York Mercantile Exchange. It was at $102.77 as of 1:21 p.m. London time after losing 1.2 percent yesterday. Crude has advanced 4.5 percent this year.
Brent oil for May settlement on the London-based ICE Futures Europe exchange fell as much as 81 cents, or 0.7 percent, to $124.05 a barrel. The European benchmark contract was at a premium of $21.31 to New York futures, compared with $20.85 yesterday, the widest closing level since October.
Oil Stockpiles
U.S. crude inventories probably increased 2.5 million barrels in the week ended March 30 to 355.9 million, the highest since August, according to the median estimate of 11 analysts surveyed by Bloomberg News before today’s Energy Department data. The government report is due at 10:30 a.m. Washington time. The industry-funded API yesterday said supplies gained 7.8 million barrels, the most since Dec. 23.
Gasoline stockpiles are estimated to have decreased 1.4 million barrels and distillate-fuel supplies probably slid 500,000 barrels, according to the survey. Yesterday’s API report showed gasoline inventories fell 4.5 million barrels and distillates dropped 1.4 million.
“While we see builds, we’ll see the crude market under pressure,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “Let’s see what the DOE data says. It’s all suggesting the economy is slowing at a time when the Fed is putting the brakes on any form of easing. It could create volatility in the market.”
Mastercard SpendingPulse
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey, which is known to traders as the DOE report.
The U.S. is the world’s largest oil consumer. Motorists in the country bought 8.87 million barrels a days of gasoline last week, according to MasterCard Inc.’s SpendingPulse report yesterday. That’s down 3.5 percent from a year earlier.
Oil in New York is falling after the moving average convergence/divergence indicator dropped below zero yesterday for the first time in seven weeks, according to data compiled by Bloomberg. Investors tend to sell contracts when the MACD indicator signals a loss of technical momentum.
In the reported minutes yesterday, the Fed also affirmed its plan, first announced in January, to hold interest rates near zero through late 2014, as the economy’s improvement may not be sufficient to lower the outlook for coming years, according to the minutes released yesterday in Washington.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
