BLBG: Oil Trades Near $79 for Fourth Day as Equity Gains Compete With Stockpiles
Crude oil traded near $79 a barrel for a fourth day in New York as concern over gains in U.S. fuel supply outweighed rising equity markets.
Oil settled unchanged at $78.98 a barrel yesterday after the Commerce Department said home purchases climbed 24 percent in June to an annual pace of 330,000, bolstering speculation the economic recovery would be sustained. U.S. gasoline and distillate stockpiles rose last week, analysts said in a Bloomberg News survey.
“The economic numbers in general were quite positive lately,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “We’re still seeing builds in the gasoline inventories which suggest that demand is increasing year-on-year but not as much as expected. So the positive news counterbalanced by the negative has given us a really range-bound market.”
Crude for September delivery was at $78.92 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchange at 12:40 p.m. Singapore time. Yesterday was the first day since September that oil closed unchanged. Futures have gained 15 percent in the past year.
Gasoline inventories probably climbed 300,000 barrels last week, based on the median estimate from 11 analysts polled by Bloomberg News before an Energy Department report tomorrow. Stockpiles of distillate fuel, including heating oil and diesel, are expected to have increased by 2 million barrels.
Crude inventories probably fell 1.75 million barrels last week, according to the survey.
Gasoline Demand
U.S. fuel demand hasn’t returned to the same levels as before the economic crisis of 2008. Gasoline delivered by refiners, a four-week average basis, reached a peak of 9.7 million barrels a day in the week of July 27, 2007. Supplies topped out at 9.5 million in August 2008.
For the week of July 16, the amount of the motor fuel delivered was at 9.4 million barrels a day.
Swings in oil prices have declined to their lowest level since May as traders are more cautious of the market direction, said ANZ’s Lim.
Crude’s 30-day historical volatility, a measure of how much oil has fluctuated around its average price, has dropped to 26.8 percent today, according to Bloomberg data. That’s the lowest since May 5 when it was at 28.2 percent.
“There are very contradicting economic numbers” said Lim. “Investors have become so short term that there is some holdback in investing in risky assets. Positive news today is gone tomorrow so there is no compelling reason for a convincing direction on oil prices.”
U.S. Growth
The U.S. economy probably expanded at a slower pace in the second quarter as the trade deficit swelled, economists said before reports this week.
Gross domestic product rose at a 2.5 percent annual pace after increasing at a 2.7 percent rate in the first quarter, according to the median estimate from 79 economists surveyed by Bloomberg News before a July 30 Commerce Department report.
European Union governments imposed their toughest sanctions yet on Iran, backing U.S. efforts to force the country to halt uranium enrichment and stop any pursuit of nuclear weapons capability. The sanctions include a ban on new investment in or equipment sales to Iran’s oil and natural-gas industries. Iran pumps the most oil in the Organization of Petroleum Exporting Countries after Saudi Arabia.
Brent crude for September settlement traded at $77.44 a barrel, down 6 cents, on London’s ICE Futures Europe exchange at 12:40 p.m. Singapore time. Yesterday, the contract rose 5 cents to settle at $77.50.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net
