BLBG: Oil Declines After U.S. Supplies Gain a Fourth Week
Oil dropped on a report showing U.S. crude stockpiles climbed for a fourth week and as a measure of China’s economy fell, signaling fuel demand may decline in the world’s second biggest user of the commodity.
Futures decreased as much as 1.9 percent after the industry-funded American Petroleum Institute said yesterday supplies rose 462,000 barrels last week. Analysts surveyed by Bloomberg said an Energy Department report today will show a 1.5 million barrel gain. Chinese services industries expanded at the weakest pace since at least March 2011, while euro-area services and manufacturing output contracted.
“We should see a gain in the report today,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Energy markets appear to be moving on concerns about weakening demand. The Chinese non-manufacturing data seems to signal that we’ll be seeing less fuel use.”
Crude oil for November delivery declined $1.29, or 1.4 percent, to $90.60 a barrel at 9:27 a.m. on the New York Mercantile Exchange. Prices are down 8.3 percent this year.
Brent oil for November settlement decreased $1.81, or 1.6 percent, to $109.76 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $19.16 to the New York-traded West Texas Intermediate grade, down from $19.68 yesterday.
Crude inventories at Cushing, Oklahoma, the delivery point for futures traded in New York, advanced 105,000 barrels to 43.8 million in the week ended Sept. 28, according to the API. That’s the first gain in four weeks.
Energy Department
The Energy Department report will probably show gasoline supplies slid 500,000 barrels last week for the 10th weekly drop, according to the median of 11 analyst responses in the Bloomberg survey. That would send stockpiles to the lowest level since October 2008. The department will release its report at 10:30 a.m. in Washington.
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.
China’s services purchasing managers’ index fell to 53.7 in September from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing today. The number was lower than any previous reading in data compiled by Bloomberg starting in March 2011. Readings above 50 indicate expansion. Similar measures for manufacturing industries have shown contractions for last month.
Iraq, OPEC’s second-biggest oil producer, is “happy” with prices at current levels, according to Thamir Ghadhban, a senior adviser to Prime Minister Nouri al-Maliki. Crude exports by the nation, which surpassed Iran’s production in June, will reach 2.9 million barrels a day next year as daily output rises to 3.6 million barrels, Ghadhban said in an interview in Dubai yesterday. Saudi Arabia is the largest of the 12 producers in the Organization of Petroleum Exporting Countries.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
