BLBG:Oil Trades Near One-Week Low as U.S. Gasoline Stockpiles Surge
Oil traded near its lowest price in a week in New York after a government report showed U.S. gasoline inventories increased the most in 11 years.
West Texas Intermediate futures were little changed after falling for a second day yesterday as the Energy Department said gasoline stockpiles rose 7.86 million barrels, the most since Sept. 21, 2001. Demand for the motor fuel slid for a third week even as refineries ran at the highest rate since August.
The inventory report “is a big negative factor for the gasoline market,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “Oil hasn’t succeeded at settling above $90 a barrel because of a lot of uncertainty like the fiscal cliff.”
Crude for January delivery was at $87.65 a barrel, down 23 cents, in electronic trading on the New York Mercantile Exchange at 2:48 p.m. Singapore time. Prices fell 62 cents yesterday to close at $87.88 a barrel, the lowest since Nov. 28. Futures have dropped 11 percent this year.
Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $108.76 a barrel after sliding $1.03 yesterday. The European benchmark crude was at a premium of $21.09 to New York-traded WTI. It closed at $20.93 yesterday, the narrowest gap since Nov. 2.
Forecasts for Brent
Separate forecasts from Morgan Stanley, Goldman Sachs Group Inc. and Oversea-Chinese Banking Corp. predict Brent crude will average $110 a barrel next year. Geopolitical tensions may cause supply disruptions in the Middle East next year, OCBC’s Barnabas Gan said in a report today.
Morgan Stanley lowered its Brent forecast from $115. Hussein Allidina, the bank’s New York-based head of commodities research, cited slower growth in research published today.
Brent will slide to $105 a barrel in 2014 as halted supplies in the Middle East and Africa resume, Jeff Currie, Goldman’s head of commodities research in New York, said in an e-mailed report yesterday.
U.S. gasoline inventories in the week ended Nov. 30 were forecast to increase by 1.55 million barrels, according to the median of 12 analyst estimates in a Bloomberg survey. Demand for the motor fuel declined 73,000 barrels a day and refineries ran at 90.6 percent of capacity, the government report showed.
Supplies of distillate fuels, including heating oil and diesel, climbed 3.03 million barrels, according to the figures. They were predicted to gain 850,000 barrels.
‘Purge of Crude’
Crude stockpiles slid 2.36 million barrels compared with a forecast decline of 500,000, the report showed. Inventories have dropped during December in the past six years, according to department data. Companies in Texas can be taxed on the value of stored crude as part of local property taxes, R.J. DeSilva, an Austin-based spokesman for the Texas Comptroller of Public Accounts, said in an e-mail.
“This is the time of year we start to get the purge of crude supplies along the Gulf of Mexico,” said Stephen Schork, the president of the Schork Group Inc. in Villanova, Pennsylvania.
Disagreement between President Barack Obama and Republican leaders in talks to avert more than $600 billion in automatic tax increases and spending cuts known as the fiscal cliff has also put pressure on oil prices.
The Obama administration is “absolutely” willing to go over the fiscal cliff if Republicans don’t agree to raise tax rates on the highest-income earners, U.S. Treasury Secretary Timothy F. Geithner said yesterday in an interview on CNBC.
Economic Contraction
Obama and House Speaker John Boehner spoke by telephone yesterday, Boehner spokesman Michael Steel said without giving details. A White House aide also confirmed the call, speaking on condition of anonymity.
The Congressional Budget Office has said the U.S. economy will contract by as much as 0.5 percent next year if Congress fails to stop the measures from taking effect. The U.S. accounted for 21 percent of the world’s oil consumption last year, according to BP Plc (BP/)’s Statistical Review of World Energy.
The Organization of Petroleum Countries may need to lower output by 1 million barrels a day, or about 3 percent, in the first half of next year, according to Societe Generale SA. Brent crude may drop 20 percent by June if the group doesn’t reduce the amount it pumps, the Centre for Global Energy Studies said.
To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
