BLBG: Crude Oil Pares Gains After Unexpected Drop in Housing Starts
Crude oil pared gains, falling from a six-month high, as housing starts in the U.S., the biggest fuel- consuming country, unexpectedly fell to a record low in April.
Oil jumped as much as 2.5 percent before the Commerce Department reported that builders broke ground on 13 percent fewer properties to an annual rate of 458,000. A government report tomorrow may show that crude oil and gasoline inventories declined last week.
“Prices are well past what the underlying fundamentals justify,” said Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York. “While there have been a few encouraging signs, we have yet to see any evidence of solid economic growth.”
Crude oil for June delivery climbed 7 cents to $59.10 a barrel at 9:09 a.m. on the New York Mercantile Exchange. Futures reached $60.48, the highest since Nov. 11, before the release of the housing numbers. Prices are up 33 percent this year.
The June crude contract expires today. The more-actively traded July contract gained 3 cents to $59.62 a barrel.
“We are looking for evidence of either falling global inventories and/or a recovery in demand,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts.
Crude-oil stockpiles dropped 1.5 million barrels in the week ended May 15 from 370.6 million the previous week, according to the median of 11 estimates by analysts before an Energy Department report this week. Supplies declined from the highest level since 1990 in the week ended May 8.
Lower Supplies
Inventories may have fallen 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.
The Energy Department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.
Brent crude for July settlement declined 18 cents, or 0.3 percent, to $58.29 a barrel on London’s ICE Futures Europe exchange.
