BLBG: Oil Trades Near Two-Week Low on Weak Demand, Stockpile Increase
By Yee Kai Pin and Ben Sharples
July 30 (Bloomberg) -- Crude oil was little changed near a two-week low on signs of weak demand in the U.S. after a government report showed an increase in fuel stockpiles in the world’s biggest energy-consuming nation.
Oil inventories, expected by analysts to decline on recovering fuel demand, gained 5.15 million barrels to 347.8 million in the week to July 24, according to a report released yesterday by the Energy Department. Gasoline stockpiles, which fell 2.3 million barrels, were 2.3 percent above the five-year average.
“Implied demand is still missing in action,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Since the start of the U.S. driving season in late May demand has been trending the wrong way. The same can be said for the other key products, distillates and aviation kerosene.”
Crude oil for September delivery traded at $63.50 a barrel, up 15 cents, on the New York Mercantile Exchange at 4:05 p.m. Singapore time. The contract fell as low as $62.76 today. Yesterday, futures dropped $3.88, or 5.8 percent, to $63.35, the biggest one-day decline since April 20 and the lowest close since July 16. Oil has risen 42 percent this year.
“The big story is the inventories,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “A lot of people had factored in that there was going to be a big crude drawdown and that just hasn’t really come through yet.”
WTI Forecast
U.S. stockpiles of distillate fuel, a category that includes diesel and heating oil, rose 2.1 million barrels to 162.6 million, the Energy Department said yesterday in a weekly report. Stocks, which have climbed seven weeks, earlier this month reached their highest since January 1985.
Goldman Sachs Group Inc. maintained its forecast that West Texas Intermediate crude oil, the reference grade for New York futures, will reach $85 a barrel by year-end as the recent weakness in fundamentals will be temporary.
“Concerns over economic growth and weak oil statistics led a commodity sell-off yesterday,” Goldman analysts, led by London-based Jeffrey Currie, said in a report today. “However, we believe most of these drivers are less negative than they first appear.”
Brent crude oil for September settlement on London’s ICE Futures Europe exchange rose 52 cents, or 0.8 percent, to $67.05 a barrel at 4:06 p.m. in Singapore. Yesterday, the contract dropped $3.35, or 4.8 percent, to $66.53.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net.
