SF: Oil Rises, Heading for Monthly Gain, on Forecast of Supply Drop
June 30 (Bloomberg) -- Oil rose for the first time in three days in New York, heading for a monthly increase, before a report forecast to show crude inventories declined in the U.S., the world's largest energy-user.
Hurricane Alex has halted about 25 percent of crude production in the Gulf of Mexico and 9 percent of natural-gas output, the U.S. government said. U.S. crude stockpiles probably dropped 1 million barrels in the week ended June 25 from 365.1 million the prior week, according to a Bloomberg News survey before today's Energy Department report. Crude was still heading for its first quarterly decline since 2008.
"Today's Energy Department data may help prices," said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. "While the supply picture does not support crude in the short term, demand is becoming a bit better. Much depends on risk aversion, so if equity markets recover, crude will go up."
Oil for August delivery rose as much as 89 cents, or 1.2 percent, to $76.83 a barrel on the New York Mercantile Exchange and was at $76.43 at 1:11 p.m. London time. The contract fell as much as 0.8 percent to $75.33 earlier. Brent crude for August delivery was up 46 cents at $75.90 a barrel on the ICE Futures Europe exchange in London.
Crude has lost 8.7 percent since the end of March and 3.7 percent this year. The contract sank to this year's low of $64.24 on May 20 and has risen 3.4 percent so far this month.
The Dollar Index, which measures the U.S. currency against those of six major trading partners, fell for the first time in three days, losing 0.3 percent on concern economic growth may falter, stoking demand for commodities as an alternative investment.
Hurricane Alex
Oil also advanced as Alex became the first June Atlantic hurricane since 1995, prompting oil and gas companies in the Gulf of Mexico to evacuate offshore workers and prepare for possible storm surges that affect coastal refineries. The Gulf Coast is home to 43 percent of operable U.S. refining capacity, according to the Energy Department.
Oil and gas producers reported that three rigs and 28 platforms have been evacuated because of the storm, the Bureau of Ocean Energy Management, Regulation and Enforcement said today in a statement on its website. Almost 396,000 barrels of daily oil output remain shut-in, along with 600 million cubic feet of gas.
The Organization of Petroleum Exporting Countries' oil output dropped from a 17-month high in June, led by a decline in Nigeria, a separate Bloomberg News survey showed.
OPEC production slipped 157,000 barrels, or 0.5 percent, to an average 29.23 million barrels a day, according to the survey. Output by members with quotas, all except Iraq, dropped 122,000 barrels to 26.865 million, 2.02 million above their target.
U.S. Stockpiles
U.S. crude inventories dropped 3.4 million barrels last week, according to a report yesterday from the industry-funded American Petroleum Institute.
"Everyone understands now that it will take more time than expected for the economy of America to get better," said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge Group in Tokyo.
The Energy Department will release its weekly report on demand and supply at 10:30 a.m. local time in Washington.
U.S. stockpiles probably dropped 1 million barrels in the week ended June 25 from 365.1 million the prior week, according to the median estimate of 15 analysts surveyed by Bloomberg News before tomorrow's government report. It would be the first decline in three weeks.
Distillate fuel supplies, including diesel and heating oil, rose 3.9 million barrels to 158.7 million, the API said. Gasoline stockpiles fell 908,000 barrels to 220.2 million.
Oil-supply totals from the API and Energy Department moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.
Crude supplies at Cushing, Oklahoma, the delivery point for the New York futures, dropped by 1.9 million barrels to 36 million, the biggest decline since the week of Sept. 11, according to the API.
