BLBG:Oil Trades Near Two-Week High as U.S. Crude Stockpiles Decline
Oil traded near the highest level in two weeks in New York after an industry report showed stockpiles fell the most in more than three months in the U.S., the world’s biggest crude consumer.
West Texas Intermediate futures were little changed after rising a third day yesterday. U.S. crude supplies dropped by 4.1 million barrels in the seven days ended Dec. 14, the most since the week to Aug. 31, data from the American Petroleum Institute showed. A government report today may say inventories shrank by 1.75 million barrels, according to a Bloomberg News survey. Oil has advanced this week amid speculation U.S. lawmakers will agree on a deal to avert tax increases and spending cuts known as the fiscal cliff, which threatens economic growth.
“There’s a level of optimism creeping into the market about the fiscal cliff coming to an end,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “I don’t think there are any reasons for oil prices to come off at the moment.”
Crude for January delivery was at $87.84 a barrel in electronic trading on the New York Mercantile Exchange, down 9 cents, at 2:46 p.m. Singapore time. The contract expires today. The more-actively traded February future slid 3 cents to $88.37. The volume traded for all contracts was 48 percent below the average of the past 100 days. Front-month futures rose 0.8 percent yesterday to $87.93, the highest close since Dec. 4.
Brent oil for February settlement on the London-based ICE Futures Europe exchange was up 10 cents at $108.94 a barrel. The European benchmark crude was at a premium of $20.57 to the corresponding WTI contract, from $20.44 yesterday.
Fiscal Cliff
Oil in New York has fallen 11 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing, Oklahoma, the country’s largest storage hub and the delivery point for WTI. That has left it at an average discount of $17.41 a barrel to Brent this year, compared with a premium of about 7 cents in the five years through 2010. Brent, the benchmark grade for more than half the world’s crude, has risen 1.4 percent this year.
More than $600 billion in spending cuts and tax increases are set to start in the U.S. in January unless an agreement to avert the measures is reached. House Speaker John Boehner said yesterday he will push a budget “plan B” measure that would include tax gains for people on incomes of more than $1 million, while continuing to negotiate with President Barack Obama.
Fuel Supplies
U.S. gasoline stockpiles climbed 4.2 million barrels last week, the API said. Supplies are forecast to rise 2 million barrels in today’s Energy Department report, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, decreased 1.9 million barrels, compared with a 1 million-barrel gain predicted in the survey.
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 in Washington for its weekly survey.
Oil’s advance in New York may stall as prices approach technical resistance along the upper Bollinger Band, according to data compiled by Bloomberg. Futures halted rallies from mid- July to mid-September and in early December near this indicator, around $89.37 a barrel today. Sell orders tend to be clustered near chart-resistance levels.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net
