MW: Crude retreats after Obama win; supply data loom
By Barbara Kollmeyer and Myra P. Saefong, MarketWatch
An earlier version of this story failed use the latest API oil supply data and inventory estimates from a Platts’ analyst survey . The story has been corrected.
SAN FRANCISCO (MarketWatch) — Crude-oil futures fell Wednesday, tracking losses for assets perceived as riskier, after initial relief over news of a second term for President Barack Obama gave way to worries about the so-called fiscal cliff confronting the U.S. government.
Crude for December delivery CLZ2 -4.10% sank $2.49, or 2.8%, to $86.22 a barrel on the New York Mercantile Exchange.
The contract had rallied 3.6% on Tuesday.
President Obama won late Tuesday a contentious race against Republican challenger Mitt Romney. Read: Dollar loses safe-haven bid as Obama wins
Obama’s reelection “should be viewed as rather bullish for oil, as in addition to a tougher stance on energy regulations and licensing in the U.S., he is friendlier toward expansionary monetary policies than his opponent,” said analysts at JBC Energy in emailed comments.
U.S. stocks declined Wednesday on Wall Street, while the U.S. dollar strengthened, as investors started worrying about the fiscal cliff — a combination of tax hikes and spending cuts that will come into effect on Jan. 1 unless politicians reach a budget deal. Obama will have to work with a divided Congress after Republicans kept control of the House of Representatives, while Democrats retained control of the Senate.
Oil markets were also jittery ahead of U.S. supply data as the Energy Information Administration releases weekly figures on petroleum supplies at 10:30 a.m. Eastern.
Analysts surveyed by Platts expect the data to show a climb of 1 million barrels in crude-oil stocks for the week ended Nov. 2. They also expect to see a decline of 1 million barrels for gasoline inventories and a fall of 2 million barrels for distillates.
Seth Rabinowitz, who covers commodities as a partner at Silicon Associates, said “rising U.S. inventories, which are expected to stay as high as a Hurricane Sandy water line in a Staten Island house unless the U.S. economy starts roaring,” are part of the reason for oil’s decline, despite Obama’s win.
“The Obama victory diminishes the probability of U.S. offshore and federal land oil drilling, which, had he lost, would have increased supply and put downward pressure on prices,” Rabinowitz explained. “But prices dropped anyway.”
Late Tuesday, the American Petroleum Institute reported that crude supplies were nearly unchanged for the week ended Nov. 2.
In a short-term outlook released Tuesday, the EIA said it expects daily U.S. crude output to average 6.3 million barrels for 2012, which would be 700,000 barrels higher than last year. Projected U.S. crude output would rise to 6.8 million barrels a day in 2013, which would be the highest since 1993.
The EIA also predicted the average price for West Texas Intermediate crude will be $88 a barrel in 2013 and said working natural-gas inventories are at a record level.
Also Wednesday, natural gas for December delivery NGZ12 -1.00% fell 5 cents, or 1.5%, to $3.56 per million British thermal units.
Heating oil for December delivery HOZ2 -2.42% fell 5 cents, or 1.7%, to $3.00 a gallon. December gasoline RBZ2 -3.16% fell 7 cents, or 2.4%, to $2.63 a gallon, reversing course after a sharp rise the previous day.
Gasoline prices have been gaining on East Coast shortages arising from damages caused by Hurricane Sandy. Philadelphia Energy Solutions returned two major refineries to full rates on Tuesday, with tankers readied to deliver to the East Coast, Bloomberg News reported.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
Myra Saefong is a MarketWatch reporter based in San Francisco.
