BLBG: Oil Little Changed as Rising U.S. Fuel Stocks Show Slow Demand
By Yee Kai Pin
July 23 (Bloomberg) -- Crude oil was little changed above $65 a barrel after U.S. fuel stockpiles rose, adding to concern the recovery in demand in the world’s largest energy-consuming nation may be slow.
Gasoline and distillate fuel inventories in the U.S. gained for a sixth week in the week to July 17, according to an Energy Department report yesterday. Gasoline supplies climbed 813,000 barrels to 215.4 million barrels, the highest since mid-April. Japan’s oil imports also fell for an eighth month.
“We do have more supply than demand given what’s happening with the global economy,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said in a Bloomberg Television interview. “It’s going to be a little bit difficult for oil to trade onwards and upwards for the time being.”
Crude oil for September delivery on the New York Mercantile Exchange traded at $65.46 a barrel, up 6 cents, at 3:03 p.m. in Singapore, after falling as low as $65.04. Yesterday, the contract declined 21 cents, or 0.3 percent, to settle at $65.40, ending a five-day advance. Prices are down 11 percent from an eight-month high of $73.38 a barrel reached on June 30.
Japan’s oil imports fell 19.1 percent in June, according to a preliminary finance ministry trade report. The country’s refiners and power utilities maintained output cuts amid the recession, which has reduced demand from the world’s second- largest economy.
“The upside is going to be limited,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo. “The market will struggle because there’s no factor to buy. Demand is still weak.”
Asian Equities Gain
Asian shares were slightly higher, with the MSCI Asia Pacific Index adding 0.6 percent to 107.25 as of 1:48 p.m. in Tokyo. U.S. shares fell yesterday, with the Standard & Poor’s 500 Index slipping 0.1 percent from an eight-month high in New York. The Dow Jones Industrial Average was down 0.4 percent.
Declines in equity markets may indicate global oil demand is staying weak, which will weigh on prices, Hasegawa said.
U.S. crude stockpiles dropped 1.8 million barrels to 342.7 million, the Energy Department also said in its Weekly Petroleum Status Report. This was less than a median 2.1 million-barrel decrease forecast by 15 estimates in a Bloomberg News survey.
“Supplies are more than adequate given the lack of apparent demand,” Stephen Schork, president of Villanova, Pennsylvania-based consultant Schork Group Inc., said in a note to clients. “Current draws are not demand driven, but rather a function of lower domestic production and fewer imports.”
Brent crude for September settlement on London’s ICE Futures Europe exchange traded at $67.42 a barrel, up 21 cents, at 3:03 p.m. in Singapore. The contract fell as low as $66.87 earlier today.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
