BLBG:Oil Trades Near Two-Day Low on Europe Debt Concern as U.S. Supplies Shrink
Oil traded near a two-day low in New York as speculation Europe will struggle to contain its debt crisis countered signs of declining fuel stockpiles in the U.S., the world’s largest crude consumer. Brent oil rose.
Futures were little changed, after falling 0.9 percent yesterday as Italy’s borrowing costs climbed to the highest level since June 1997 at an auction, deepening concern that Europe’s crisis is worsening. U.S. crude and fuel inventories probably shrank for a second week, according to a Bloomberg News survey before tomorrow’s Energy Department report. Hedge funds raised bullish bets on oil the most since May, a Commodity Futures Trading Commission report showed.
“There is still a lot of uncertainty over Europe,” said Ken Hasegawa, a commodity-derivatives trading manager at Newedge Group in Tokyo who says futures will trade between $95 and $100 a barrel this week. “Last night’s decline was a correction but the downside will be limited from a technical point of view.”
Crude for December delivery was at $98.29 a barrel, up 15 cents, in electronic trading on the New York Mercantile Exchange at 10:34 a.m. Singapore time. The contract dropped 85 cents to settle at $98.14 yesterday. Prices have increased 7.6 percent this year, after rising 15 percent in 2010.
Brent oil for December settlement on the ICE Futures Europe exchange, which expires today, was up 45 cents, or 0.4 percent, at $112.34 a barrel. The more actively traded January contract climbed 38 cents to $111.66.
‘Fair’ Price
The European benchmark crude was $14.05 a barrel higher than New York futures, after ending yesterday at a $13.75 premium, the lowest since May 25. The spread is down 49 percent from a record high of $27.88 on Oct. 14.
Brent crude at $100 to $110 a barrel is fair for producers and consumers, Algerian Oil Minister Youcef Yousfi said yesterday in Doha. Oil ministers from Iran, Nigeria and Algeria, which are members of the Organization of Petroleum Exporting Countries, said Nov. 13 that markets aren’t oversupplied. The 12-member group is scheduled to meet Dec. 14 in Vienna.
Oil in New York has technical support along its 200-day moving average, according to Hasegawa at Newedge. The indicator was at $95.15 a barrel today, based on data compiled by Bloomberg. Buy orders tend to be clustered near chart-support levels.
Hedge Fund Bets
Hedge funds and other large speculators increased wagers on rising prices by 7.2 percent in the week ended Nov. 8 to 203,965 futures and options combined, according to the CFTC’s Commitments of Traders report yesterday. That’s the highest level since May 31.
U.S. crude stockpiles probably decreased 1 million barrels, or 0.3 percent, in the week ended Nov. 11, according to the median estimate of 11 analysts surveyed by Bloomberg News before the Energy Department report tomorrow. Supplies slid 1.4 million barrels to 338.1 million the prior week.
Gasoline inventories are expected to have dropped 1 million barrels, the survey showed. Stockpiles previously fell to 204.2 million, the lowest since June 2009, as imports and refinery output declined. The industry-funded American Petroleum Institute will release its own stockpile data today.
Italy sold 3 billion euros ($4 billion) of five-year bonds yesterday, the maximum target, to yield 6.29 percent, up from 5.32 percent at the last auction on Oct. 13.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
