BLBG:Oil Falls From Four-Month High as U.S. Stockpiles Seen Gaining
Oil fell in New York as investors speculated that a rally to the highest level in almost four months was excessive amid rising stockpiles and concern the U.S. economic recovery may be derailed by a budget dispute.
Futures slid as much as 0.5 percent after advancing 0.6 percent yesterday. U.S. crude stockpiles probably gained by 2.4 million barrels last week, according to a Bloomberg News survey before an Energy Department report tomorrow. Financial markets “could go haywire” if lawmakers don’t raise the government’s debt limit, President Barack Obama said at a White House news conference. Oil slipped after its relative strength index climbed above 70, signaling prices may have climbed too far.
“We are seeing some pullback,” said Victor Shum, the managing director at IHS Consulting in Singapore. “Given the market fundamentals, above $94 was just too strong.”
Crude for February delivery dropped as much as 43 cents to $93.71 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.86 at 4:09 p.m. Singapore time. The contract increased to $94.14 yesterday, the highest settlement since Sept. 18. Prices fell 7.1 percent last year.
Brent for February settlement, which expires tomorrow, was at $111.59 a barrel, down 29 cents, on the London-based ICE Futures Europe exchange. The more active March contract slid 30 cents to $110.65. The front-month European benchmark contract was at a premium of $17.73 to West Texas Intermediate futures. It settled at $17.08 on Jan. 11, the narrowest since Sept. 19.
The 14-day relative strength index for oil in New York climbed above 70 yesterday for the second time in three days, according to data compiled by Bloomberg. That level signals a market is overbought and may decline. Today’s reading is 66.8.
Oil Stockpiles
U.S. gasoline supplies rose by 2.6 million barrels in the seven days ended Jan. 11 for an eighth weekly gain, according to the median estimate of eight analysts in the Bloomberg survey before tomorrow’s report. Distillate inventories, a category that includes heating oil and diesel, probably increased by 1.5 million.
The nation’s oil output advanced to 7 million barrels a day in the week ended Jan. 4, the most since March 1993, data from the Energy Department show.
The American Petroleum Institute is scheduled to release separate data today. 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.
Obama and congressional Republicans appear headed toward a confrontation during the next six to eight weeks over the government’s $16.4 trillion borrowing limit. The president said yesterday that he won’t negotiate over raising the debt ceiling, which Republicans say should be linked to a reduction in the budget deficit.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
