BLBG: Oil Falls From One-Week High in New York as U.S. Gasoline Stockpiles Surge
Oil dropped from the highest in almost a week in New York after an industry-funded report showed gasoline inventories surged in the U.S., the world’s largest crude user, signaling demand may falter.
Futures slipped as much as 1.4 percent, switching direction for a sixth straight session. Stockpiles of motor fuel climbed 2.44 million barrels in the week ended May 20, the most since Feb. 4, the American Petroleum Institute said yesterday. Demand slid 1.5 percent. An Energy Department report today was forecast to show supplies rose 450,000 barrels in a Bloomberg survey.
“For the moment the slowdown in global growth is masking a shortfall in global crude supply,” said Christopher Bellew, senior broker at Bache Commodities in London. “We’re going to see oil inventory, economic data and currencies push Brent crude around within a narrow range of about $108 to $113.”
Crude for July delivery fell as much as $1.39 to $98.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $98.99 at 1:16 p.m. London time. Yesterday, the contract rose $1.89, or 1.9 percent, to $99.59, the highest since May 18. Prices have gained 41 percent in the past year.
Brent crude for July settlement on the ICE Futures Europe exchange in London was at $112.58 a barrel, up 5 cents, after dropping as much as $1.39, or 1.2 percent, to $111.14 a barrel. The contract yesterday gained $2.43, or 2.2 percent, to $112.53, the highest settlement since May 16.
Gasoline Prices
U.S. gasoline stockpiles rose to 211.2 million barrels last week, according to the API report. Pump prices of almost $4 a gallon, the highest since 2008, are deterring motorists just as the country’s vacation season starts. Retail demand for the fuel was down 2 percent last week from a year earlier, MasterCard Advisors said yesterday.
The amount of motor fuel supplied by refiners fell 148,000 barrels to 9.6 million barrels a day, reversing two weeks of gains, the API said.
“Gasoline stockpiles rose significantly at a time when the market is expecting a decline ahead of the peak demand season,” said Serene Lim, a commodity and energy strategist at Australia & New Zealand Banking Group Ltd. in Singapore, who predicts oil will average $105 a barrel this year. “The market is looking for the Energy Department data to confirm these API numbers.”
U.S. crude inventories shrank 860,000 barrels last week to 368.1 million, ending a six-week increase, based on the API report. The Energy Department report may show stockpiles fell 1.5 million barrels, according to the median estimate of 13 analysts surveyed by Bloomberg News.
Crude Supplies
Oil-supply totals from the API and the Energy Department have moved in the same direction 72 percent of the time over the past year, according to Bloomberg calculations. Gasoline-supply totals in the two reports have moved in the same direction about 74 percent of the time.
Japan, the world’s third-largest crude consumer, cut oil imports last month after the March 11 earthquake shut refineries and disrupted factories. Overseas purchases fell 14 percent from a year earlier to 16.97 million kiloliters in April, the finance ministry said in a preliminary trade report today.
Brent futures rose yesterday after Goldman Sachs Group Inc. and Morgan Stanley increased their price forecasts. The conflict in Libya has reduced spare production capacity in the Organization of Petroleum Exporting Countries, the banks said.
Brent Premium
The European benchmark crude has advanced 18 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Iran and Syria. North Atlantic Treaty Organization aircraft struck targets in Tripoli as the coalition intensified its attacks on forces loyal to Libyan leader Muammar Qaddafi.
Brent was at a premium of $13.35 a barrel to New York- traded West Texas Intermediate grade today. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21. It averaged 76 cents last year.
To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
