BLBG:Oil Falls to 7-Week Low on Demand Outlook, Stockpile Gain
Oil fell to the lowest level in seven weeks after a report showed rising U.S. stockpiles and the Federal Reserve Bank of Philadelphia President Charles Plosser said a new stimulus plan probably won’t boost economic growth.
Futures slid as much as 0.9 percent, extending yesterday’s 0.6 percent decline. The American Petroleum Institute said crude supplies increased 335,000 barrels for a third weekly gain, while Citigroup Inc. cut its global demand forecasts. Bond purchases announced by the Fed this month probably won’t spur expansion or hiring, Plosser said in a speech yesterday. Oil surged to a 2012 high of $100.42 a barrel on Sept. 14 after the Federal Open Market Committee said it will undertake a third round of quantitative easing.
“There is less demand and more supply,” said David Lennox, an analyst at Fat Prophets in Sydney. “We have a history of the U.S. introducing a number of quantitative easings, and they’re bouncing along the bottom somewhere. It just hasn’t worked.”
Crude for November delivery fell as much as 80 cents to $90.57 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.83 at 3 p.m. Singapore time. Futures slid 56 cents to $91.37 yesterday, the lowest close since Aug. 2. They are up 6.9 percent this quarter and down 8.1 percent this year.
Brent oil for November settlement dropped 60 cents, or 0.5 percent, to $109.85 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $19.02. It closed at $19.08 yesterday, the widest spread since Aug. 16.
Crude Stockpiles
U.S. crude stockpiles rose to 361.8 million barrels last week, the highest since the week ended Aug. 24, the API said. An Energy Department report today may show inventories climbed 1.9 million barrels, according to the median estimate of 11 analysts in a Bloomberg News survey.
Gasoline supplies gained 112,000 barrels last week, the API said. They are projected to increase 500,000 barrels, according to the survey. Distillate inventories, a category that includes heating oil and diesel, fell 483,000 barrels compared with a forecast gain of 500,000.
The industry-funded 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.
Iraqi Production
Crude output by Iraq rose to the highest level since 1979, according to the Oil Ministry. The nation is producing 3.328 million barrels a day, the ministry said in a statement on the website of the official National Media Center yesterday. Iraq overtook Iran in June as the second-biggest oil producer in the Organization of Petroleum Exporting Countries, according to International Energy Agency data.
Citigroup cut its oil-demand outlook on a slowdown in nations outside the Organization for Economic Cooperation and Development. Consumption will climb to 89.7 million barrels a day this year from 89.1 million in 2011, less than a July projection of 90.1 million, Edward L. Morse, the bank’s global head of commodities research in New York, said in an e-mailed report yesterday. Demand in 2013 will rise to 90.7 million barrels a day, compared with a previous estimate of 91 million.
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 at akwiatkowsk2@bloomberg.net
