BLBG: Crude Oil Falls Before Report That May Show U.S. Supply Gain
Crude oil fell in New York before a government report today that’s forecast to show U.S. stockpiles increased for the 15th time in 17 weeks.
Inventories rose 1.4 million barrels in the week ended Jan. 16, according to the median of 14 analyst estimates in a Bloomberg News survey. Stockpiles at Cushing, Oklahoma, where the West Texas Intermediate grade traded in New York is stored, have risen to the highest level in at least four years.
“We will continue to see crude supplies increase on a weekly basis throughout the quarter, and some of these gains should be eye-popping,” said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Illinois. “There’s also a lot of excess supply sitting out there, some of which is going to find its way to the U.S. market.”
Crude oil for March delivery fell 91 cents, or 2.1 percent, to $42.64 a barrel at 10:13 a.m. on the New York Mercantile Exchange. Prices are down 53 percent from a year ago.
The U.S. Energy Department will release its weekly supply report at 11 a.m. today in Washington, a day later than usual because of the Martin Luther King Jr. holiday on Jan. 19.
Companies including Citigroup Inc.’s Phibro LLC, Royal Dutch Shell Plc and BP Plc have stored oil on tankers as the so-called contango, a market where buyers pay more for supplies later in the year than now, allows them to profit from hoarding crude.
Saudi Arabia, the world’s top oil exporter, decided to cut production by 300,000 barrels a day below its OPEC quota to prop up prices, Algerian Oil Minister Chakib Khelil told the state-run newspaper El Moudjahid. The desert kingdom will make the reduction before a March 15 meeting of the Organization of Petroleum Exporting Countries.
Production Targets
New production targets for OPEC members came into effect Jan. 1 following a Dec. 17 meeting in Oran, Algeria. The 12- member group needs to make the deepest supply cuts in its history to comply with the revised quotas.
The 11 OPEC nations subject to output limits pumped a combined average of 27.45 million barrels a day last month, according to Bloomberg estimates. That’s 2.6 million barrels more than the 24.845 million-barrel-a-day ceiling. Iraq is exempt from quotas.
Prices also dropped after data on housing starts and jobless claims signaled that the recession in the U.S., the world’s biggest oil-consuming country, is deepening.
Housing starts fell 16 percent last month to an annual rate of 550,000, the lowest since the government started compiling statistics in 1959, the Commerce Department said today in Washington. Another government report showed the number of Americans filing first-time claims for unemployment benefits rose last week, matching a 26-year high.
Brent crude oil for March settlement rose 17 cents, or 0.4 percent, to $45.19 a barrel on London’s ICE Futures Europe exchange.
