BLBG: Oil Rises With Equities After Report Shows Gasoline Supply Drop
May 26 (Bloomberg) -- Oil rose more than 2 percent in New York as equities rallied and an industry report showed a decline in U.S. gasoline inventories, drawing investors back to crude.
Oil surged as European stocks rebounded from an eight-month low on speculation that this month’s slump may have been overdone. The American Petroleum Institute said yesterday that gasoline supplies fell 3.19 million barrels last week. The Energy Department will release its own report today. Crude has dropped 19 percent from a 2010 peak of $87.15 on May 3.
“We’ve found a floor around here in the $65-to-$70 range” said Thorbjorn Bak Jensen, an analyst with Global Risk Management in Middelfart, Denmark. “Of course the API was bullish. But monetary issues and consumers trying to hedge off inflation are more supportive than fundamentals.”
Crude oil for July delivery rose as much as $2.12, or 3.1 percent, to $70.87 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $70.76 at 1:18 p.m. London time. Brent crude oil for July settlement snapped a nine- day losing streak, advancing $1.82 to $71.37 on London’s ICE Futures Europe exchange.
The U.S. Energy Department report to be published today may show gasoline inventories increased by 300,000 barrels in the seven days ended May 21, according to the median of 18 analyst estimates in a Bloomberg News survey. The figures will be released at 10:30 a.m. Washington time.
U.S. crude supplies rose by 616,000 barrels last week, according to the API. The Energy Department today may show supplies rose by 250,000 barrels, according to the survey.
Weaker Euro
Oil declined 2.1 percent in New York yesterday as the dollar rose against the euro, reducing the appeal of commodities to investors. The shared currency fell as the International Monetary Fund said Spain has been too slow to strengthen its banking system.
Brent settled at $69.55 yesterday, its lowest close since Oct. 7. The premium for Brent contracts over New York oil, around 48 cents today, is the lowest since April 14. The U.S. benchmark is normally more expensive than North Sea Brent to reflect its superior quality.
The American Petroleum Institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires reports to be filed with the Energy Department for its weekly survey.
Oil-supply totals from the API and DOE moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.
Pipeline Spill
“The drop in the gasoline inventories has brought optimism back to the market,” said Serene Lim, an energy and commodity strategist with Australia & New Zealand Banking Group Ltd. “Crude prices have been oversold the past two weeks so that is opening up some buying opportunities.”
Alyeska Pipeline Service Co., whose biggest shareholder is BP Plc, shut the Trans-Alaska system yesterday after a leak of “several thousand barrels.”
The spill occurred about 10:20 a.m. local time as Alyeska tested a fire command system at pump station No. 9 near the town of Delta Junction, Alaska, the company said in a statement. During the test, a power failure led a valve to fail, causing oil to drain into a tank that overflowed into a secondary containment area.
