BLBG:Oil Rebounds From Eight-Week Low as Declines Seen Exaggerated
Oil rebounded from the lowest close in almost two months as investors speculated that recent losses were exaggerated.
Futures advanced as much as 0.6 percent in New York after falling to near technical-support levels. Prices slid 1.5 percent yesterday, the seventh decline in eight days, on concern the European debt crisis will worsen and derail the global economy. Spaniards held protests and Greeks staged a general strike to oppose austerity measures. U.S. fuel demand fell in the past four weeks, an Energy Department report showed.
“There is light support from a technical point of view,” said Ken Hasegawa, a sales manager at Newedge Group in Tokyo. “It makes sense that it rebounded.”
Oil for November delivery gained as much as 57 cents to $90.55 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.36 at 2:59 p.m. Singapore time. The contract yesterday fell $1.39 to $89.98, the lowest close since Aug. 2. Prices are down 6.3 percent this month and up 6.4 percent this quarter.
Brent oil for November settlement rose 37 cents, or 0.3 percent, to $110.41 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $20.05. It closed at $20.06 yesterday, the widest spread since Aug. 16.
Technical Support
Oil in New York is rebounding after approaching technical support at $88.35 a barrel. That’s the 50 percent Fibonacci retracement of the rise to $99 on Sept. 14 from the 2012 low of $77.69 in June. Crude also gained after settling below its lower Bollinger Band at $90.12 a barrel yesterday. The last time it closed below the band on Sept. 20 it increased 1.1 percent the next day. Buy orders tend to be clustered near chart-support levels.
Prices fell yesterday as Spanish protesters marched for a second night in Madrid, calling on Prime Minister Mariano Rajoy to reverse austerity measures as his nine-month-old government prepared its fifth package of budget cuts. The nation’s 10-year bond yields rose above 6 percent, approaching the levels seen before European Central Bank President Mario Draghi offered to buy struggling nations’ debt.
Schools, hospitals, ferries and government services shut down in Greece yesterday in the first walkout since February. Thousands of protesters streamed into the central Syntagma Square in Athens, opposite the Parliament House. The government is planning an austerity package that Prime Minister Antonis Samaras says is vital to keep the nation in the euro area.
Fuel Demand
“There is pessimism coming into the market,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “Oil is obviously under pressure as a result of what’s happening in Europe.”
U.S. total fuel use decreased 1.1 percent to 18.4 million barrels a day, the lowest level since April 6, in the four weeks ended Sept. 21 and crude stockpiles last week were at the highest level for this time of the year since 1990, according to the Energy Department report. Crude stockpiles fell 2.45 million barrels to 365.2 million, the report showed. They were forecast to rise 1.9 million, according to a Bloomberg News survey.
Gasoline inventories dropped 481,000 barrels last week, the Energy Department said. They were projected to gain 500,000 barrels, according to the median estimate of 11 analysts in the survey. Distillate supplies, a category that includes heating oil and diesel, declined 482,000 barrels compared with a forecast 500,000 barrel increase in the survey.
U.S. oil production surged last week to the highest level since January 1997, reducing the country’s dependence on imported fuels as new technology unlocks crude trapped in shale formations. Output rose by 3.7 percent to 6.509 million barrels a day in the week ended Sept. 21, the Energy Department said. The nation met 83 percent of its energy needs in the first six months of the year, department data show. Imports have declined 3.2 percent from the same period a year earlier.
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 at akwiatkowsk2@bloomberg.net
