BLBG: Oil Is Little Changed Near Three-Week High as Dollar Weakens
By Grant Smith and Christian Schmollinger
July 28 (Bloomberg) -- Crude oil traded little changed near a three-week high in New York as the dollar fell to its lowest level this year, making oil more attractive as a currency hedge.
The U.S. Energy Department will probably say that crude inventories declined for an eighth week, according to a Bloomberg survey before the department’s report tomorrow. The Commerce Department yesterday reported U.S. new-home sales climbed the most in eight years in June, a sign the deepest housing slump since the Great Depression is starting to stabilize.
“If there’s a weaker dollar, there’s more risk appetite,” said Amrita Sen, analyst at Barclays Capital in London. “But the move back up in prices has been about a lot of macro optimism, and demand looking better in the non-OECD.”
Crude oil for September delivery traded at $68.45 a barrel, up 7 cents, in electronic trading on the New York Mercantile Exchange at 10:35 a.m. London time. Yesterday, it rose as high as $68.99, the highest since July 2. Oil has gained 54 percent this year.
Brent crude oil for September settlement traded at $71.11 a barrel, up 30 cents, on London’s ICE Futures Europe exchange.
European and Asian stocks rose, advancing the MSCI World Index for a 12th day, after earnings beat analysts’ estimates. The Dollar Index, tracking the dollar against currencies including the yen, pound and Swedish krona, fell to 78.315 today, the lowest level since Dec. 18.
Equities Rise
“The surge in equities over the last two weeks has been the prime driver for the move in crude from $58 to $68 over the same time period,” said Mike Sander, an investment adviser with Sander Capital in Seattle.
China’s oil consumption will rebound “gradually” in the second half of this year along with an economic recovery, the China Petroleum and Chemical Industry Association said today.
U.S. crude oil supplies probably fell 1.6 million barrels last week from 342.7 million, according to the median of seven estimates by analysts before an Energy Department report tomorrow. Four of those surveyed said supplies dropped, and three forecast an increase.
Gasoline inventories probably declined 650,000 barrels from 215.4 million, according to the median forecast in the survey.
Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 1 million barrels from 160.5 million. Six out of the seven respondents forecast a gain.
The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. tomorrow in Washington.
“It’s still a sideways market right now,” said Clarence Chu, a trader with crude oil options dealer Hudson Capital Energy in Singapore. “The fundamentals don’t support oil at $70. It looks like we’re heading there but very slowly.”
To contact the reporters on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
