BLBG: Oil Is Little Changed After Rising on Gains in U.S. Equities
Crude oil was little changed in New York, near $59 a barrel, as gains in the stock market increased optimism that the global economy is recovering.
Japanese stocks including Toyota Motor Corp. and Sony Corp. climbed, adding to a rally in the U.S. equity markets that pushed the S&P 500 Index up 3 percent and the Dow Jones Industrial Average 2.9 percent higher. U.S. crude oil stockpiles probably fell for a second week as refiners increased their operations, according to a Bloomberg News survey.
“Sentiment has driven this market from its lows in the hopes of an imminent recovery,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “If we do see equities continue their rally, oil and a lot of other commodities are probably going to follow.”
Crude oil for June delivery was at $59 a barrel, down 3 cents, on the New York Mercantile Exchange at 11:42 a.m. Singapore time. The contract earlier rose as much as 0.4 percent to $59.28 a barrel. Yesterday, June futures increased $2.69, or 4.8 percent, to end at $59.03 a barrel, the highest settlement since Nov. 11. Futures are up 32 percent this year.
Prices were also supported by concerns of disruptions to African oil supplies as Nigerian militants threatened to block waterways used for energy exports and a fire at a Sunoco Inc. refinery in Delaware affected operations.
The June crude contract expires today. The more-actively traded July contract fell 13 cents to $59.46 a barrel at 10:51 a.m. in Singapore.
$60 Resistance
The June contract rose to a six-month high of $60.08 a barrel on May 12 and then dropped back to $56.34 on May 15.
“$60 is still the resistance level,” said Clarence Chu, a trader with oil options dealer Hudson Capital Energy in Singapore. “Everybody is still looking at the June contract even though July is where the volume and the liquidity are.”
Crude-oil stockpiles dropped 1.75 million barrels in the week ended May 15 from 370.6 million the previous week, according to the median of eight estimates by analysts before an Energy Department report this week.
Inventories may fall as oil imports to the U.S., the world’s biggest crude user, decline. Supplies brought into the country fell 12 percent to 8.71 million barrels a day in the week ended May 8, the lowest since the week ended Sept. 12, the Energy Department said on May 13.
Refineries probably operated at 84.1 percent of capacity last week, up 0.4 percentage point from the previous week, according to the median of responses in the survey. Refinery operations usually climb for the peak gasoline-consumption period, which lasts from the Memorial Day weekend in late May to Labor Day in September.
Marcus Hook Refinery
Gasoline stockpiles fell 1.5 million barrels from 208.3 million the prior week, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, increased 950,000 barrels from 147.5 million.
The Energy Department is scheduled to release its weekly report on May 20 at 10:30 a.m. in Washington.
Sunoco, the largest refiner in the U.S. Northeast, closed a gasoline making unit and is operating its crude distillation plant at reduced rate at it Marcus Hook, Pennsylvania, facility after a fire at the ethylene unit.
The refinery can process 175,000 barrels a day of crude oil into fuels including gasoline and diesel. The company plans to “optimize” operations at its plants in Philadelphia and Eagle Point, New Jersey, to meet customer needs, Sunoco spokesman Thomas Golembeski said yesterday.
Gasoline for June delivery was at $1.7590 a gallon at 11:18 a.m. Singapore time. It yesterday gained 7.75 cents, or 4.6 percent, to $1.7581 a gallon in New York, the highest settlement since Oct. 15.
Nigerian Fighting
The Movement for the Emancipation of the Niger Delta said that ships near the southern part of the country would be traveling at their own risk. Fighting in Nigeria has escalated since May 13 when militants said they responded to an army offensive by attacking military positions and hijacking a tanker.
MEND claimed responsibility May 17 for rupturing two pipelines supplying oil and natural gas from a Chevron Corp. facility to domestic refineries and power stations. The rebel group has threatened to blockade waterways in the southern region used for oil and gas exports.
Nigeria produces low-sulfur, or sweet, oil, prized by U.S. refiners because of the proportion of high-value gasoline and diesel it yields.
Brent crude for July settlement was at $58.29 a barrel, down 18 cents, on London’s ICE Futures Europe exchange at 11:31 a.m. Singapore time. The contract yesterday rose $2.49, or 4.4 percent, to end the session at $58.47 a barrel. It was the highest settlement since Nov. 10.
