BLBG: Crude Oil Little Changed Before Supply Report as Equities Gain
Oil traded little changed in New York as equities gained and the dollar weakened against the euro, spurring demand for crude as an inflation hedge.
Oil also rose after the American Petroleum Institute, or API, said yesterday that U.S. crude stockpiles grew by 800,000 barrels last week. That compares with an increase of 2.8 million barrels which the Energy Department is expected to report later today, according to a Bloomberg survey.
“There probably won’t be much action before the inventory report, but sentiment is certainly being helped by the firmer equity markets and inflation hedging on the back of the weaker dollar,” said Andrey Kryuchenkov, an analyst with VTB Capital in London.
Crude oil for March delivery traded for $41.65 a barrel, 7 cents higher on the New York Mercantile Exchange as of 1:29 p.m. London time. It earlier rose as much as 87 cents, or 2.1 percent, to $42.45 a barrel.
The MSCI World Index added 0.9 percent to 861.84 at 1:30 p.m. in London, rising for a third day. The dollar lost 0.8 percent to the single European currency to trade at $1.3289.
Crude-oil supplies rose to 338.1 million barrels last week, the API report showed. Gasoline stockpiles increased 942,000 barrels and inventories of distillate fuel, a category that includes heating oil and diesel, declined 345,000 barrels.
The API said on Dec. 22 that it would change its data release time to 4:30 p.m. on Tuesdays, splitting from the schedule of similar data by the U.S. Energy Department.
Inventories Gain
The Energy Department report will probably show crude oil inventories rose for a 16th time in 18 weeks, increasing 2.8 million barrels in the week ended Jan. 23, according to the median of 13 analyst estimates in a Bloomberg News survey.
Gasoline stockpiles rose 1.75 million barrels from 220 million, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 1.13 million barrels from 145 million.
The Energy Department will release its data at 10:30 a.m. in Washington today.
Yesterday, crude oil for March delivery fell $4.15 to settle at $41.58 a barrel, the biggest decline since Jan. 7. Prices are down 6.8 percent in 2009 and are 54 percent lower than a year ago.
Oil slumped as the Conference Board’s index of U.S. confidence to 37.7, lower than forecast. A separate report showed the drop in house prices in major metropolitan areas deepened in November.
Contango Narrows
Brent crude oil for March settlement rose as much as $1.27, or 2.9 percent, to $45 a barrel on London’s ICE Futures Europe exchange. It was at $44.13 at 1:31 p.m. London time. It declined $3.23, or 6.9 percent, to end the session at $43.73 a barrel yesterday.
The price of oil for delivery next December is 29 percent more than for the current month, narrowing from 35 percent on Jan. 16. The structure in which a future month’s price is higher than one before it is known as contango and increases the opportunity for traders to profit from storing crude.
Companies and traders have put as much as 80 million barrels of crude in tankers as the contango allowed them to profit from storing oil. Royal Dutch Shell Plc sold more than 1 million barrels of crude stored off the U.K. since at least December. A vessel hired by Citigroup Inc.’s Phibro LLC left its anchorage in Scotland for the U.S. last week.
“The tightening of the contango over the past week is the sign of the beginning of a bottoming in the market,” said Jonathan Kornafel, a director for Asia at options trader Hudson Capital Energy in Singapore. “That whole phase of floating storage and selling the contango has run its course.”
