BLBG:Oil Trades Near Four-Month High After Crude Stockpiles Decline
Oil traded near the highest level in four months in New York as a surprise drop in U.S. crude stockpiles countered concern the global economic recovery may falter and curb fuel demand.
Futures were little changed after rising 1 percent yesterday, the most in two weeks. Crude supplies slid 951,000 barrels last week, Energy Department data showed. They were forecast to increase by 2.2 million, according to a Bloomberg News survey. Demand is “not in good shape,” United Arab Emirates Oil Minister Mohamed Al-Hamli said as the Organization of Petroleum Exporting Countries released a report showing it reduced output to the lowest in more than a year.
“The oil market has been trying to reach new highs but is being met by profit taking,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo, who estimated investors have a near-term target of $95 a barrel for New York crude. “Fundamentally the market is not strong enough to get there yet, but yesterday’s news of OPEC cutting production in December was good support.”
Crude for February delivery was at $93.99 a barrel, down 25 cents, in electronic trading on the New York Mercantile Exchange at 3:39 p.m. Singapore time. The contract climbed 96 cents to $94.24 yesterday, the most since Jan. 2. It was the highest close since Sept. 18.
Brent for March settlement on the London-based ICE Futures Europe exchange was up 7 cents at $109.75 a barrel. The European benchmark crude was at a premium of $15.76 to New York-traded West Texas Intermediate for the same month. The spread was at $16.37 yesterday, the narrowest since Sept. 19.
Technical Support
WTI dropped 7.1 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing, Oklahoma, America’s largest storage hub and the delivery point for New York contracts. That left it at an average discount of $17.47 a barrel to Brent last year, compared with a premium of about 7 cents in the five years through 2010. Brent, the benchmark variety for more than half the world’s crude, advanced 3.5 percent last year.
Oil’s rebound in New York yesterday kept futures within an upward-sloping trend channel going back more than five weeks on the daily chart, according to data compiled by Bloomberg. The bottom of this channel is around $93.50 a barrel today. It represents technical support, a level where buy orders may be clustered.
U.S. crude stockpiles fell by 951,000 barrels to 360.3 million in the seven days ended Jan. 11, the Energy Department report showed yesterday. At the same time, supplies at Cushing climbed by 1.8 million barrels to a record 51.9 million
OPEC Production
Gasoline inventories increased for an eighth week, the longest rising streak since March 2008, to 235 million barrels. That was the highest level since February 2011. Distillate-fuel inventories, including heating oil and diesel, advanced to 132.4 million, the highest since March, according to the data.
OPEC, which supplies about 40 percent of the world’s crude, reduced output by 465,000 barrels a day in December to 30.4 million, the slowest rate since October 2011, it said yesterday in its monthly report, citing secondary sources. That’s still 800,000 a day more than a daily average of 29.6 million that the group estimates it will need to pump this year.
OPEC is waiting to see how the European debt crisis will be handled to judge crude consumption, Al-Hamli said at the World Future Energy Summit in Abu Dhabi yesterday. The group kept its 2013 global demand forecast at 89.6 million barrels a day, up 760,000 from 2012.
Economic Outlook
Oil dropped earlier after reports showed Singapore’s exports slid the most in 14 months and Australian employers unexpectedly cut payrolls in December. Singapore’s overseas shipments slumped 16.3 percent in December as manufacturers sold fewer electronics and pharmaceuticals, according to data from International Enterprise Singapore, a unit of the Ministry of Trade and Industry.
Australia cut 5,500 jobs last month and the unemployment rate rose to 5.4 percent from 5.2 percent, figures from the statistics bureau showed. The nation posted its worst back-to- back years of employment growth since the 1997 Asian financial crisis, according to government data compiled by Bloomberg. Payrolls were up 148,300 last year after a 49,800 gain in 2011.
“There are a number of things which markets are watching, including likely demand and levels of economic growth,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Globally, supply levels look to be well and truly covering demand.”
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
