BLBG:Oil Trades Near Two-Week Low on Bets Europe Demand May Falter Amid Crisis
Oil traded near a two-week low in New York after a German bond auction fell short of expectations, stoking speculation Europe’s worsening debt crisis will threaten the region’s economy.
Futures were little changed after dropping 1.9 percent yesterday. Germany, Europe’s biggest economy, failed to find buyers for 35 percent of bonds at an auction. U.S. orders for goods meant to last at least three years declined for a second month in October, according to a Commerce Department report. Oil traded near its 200-day moving average around $95 a barrel.
“The market is turning to weakness from the bullish side because of the Europe situation,” said Ken Hasegawa, a commodity-derivatives trading manager at Newedge Group in Tokyo who predicts oil may drop below the moving average today. “The German auction is accepted as a bearish factor.”
Crude for January delivery was at $96.23 a barrel in electronic trading on the New York Mercantile Exchange, up 6 cents, at 11:23 a.m. Singapore time. Yesterday, the contract slid $1.84 to $96.17, the lowest settlement since Nov. 9. Prices have gained 5.3 percent this year after rising 15 percent in 2010.
Floor trading is closed today for the U.S. Thanksgiving holiday and electronic transactions will be booked with tomorrow’s trades for settlement purposes.
Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $107.49 a barrel, up 47 cents. The European benchmark crude was at a premium of $11.32 to New York-traded West Texas contracts. The spread reached a record $27.88 on Oct. 14.
Moving Average
U.S. crude’s 200-day moving average is at $95.49 a barrel today, according to data compiled by Bloomberg. Buy orders tend to be clustered near chart-support levels. The market may extend losses to $90 “within this month” if futures settle below this indicator, said Hasegawa at Newedge.
German business confidence probably declined to a 20-month low in November as the euro area’s worsening debt crisis threatens to tip the economy into recession. The Ifo institute’s business climate index, based on a poll of 7,000 executives, will drop to 105.2 from 106.4 in October, the median forecast of 40 economists in a Bloomberg News survey showed. The institute will release its report at 10 a.m. in Munich today.
The European Union accounted for 16 percent of world oil demand in 2010, according to BP Plc’s annual Statistical Review of World Energy. The U.S. is the largest oil consumer, using 19.1 million barrels a day, or 21 percent of global consumption.
Fuel Stockpiles
U.S. gasoline inventories last week surged the most since January, according to an Energy Department report yesterday. Stockpiles rose 4.48 million barrels to 209.6 million in the period ended Nov. 18 as imports and refinery output increased for a second week.
Crude supplies fell for a third week to 330.8 million barrels, the lowest since January 2010, the report showed. Stockpiles were forecast to climb 500,000 barrels, based on the median estimate of 13 analysts surveyed by Bloomberg News.
“The decrease in inventory is going to be a supportive factor to keep crude oil from losing too much ground,” said Hasegawa. “One hundred dollars is not far from now but I really doubt it will exceed the recent high of around $103.”
Goldman Sachs Group Inc. yesterday raised its forecast for West Texas crude to $102 a barrel for the first quarter of 2012. The bank cited a Nov. 14 announcement by Enbridge Inc. that it would reverse the Seaway pipeline to boost the flow of oil from Cushing to the Gulf of Mexico. The storage hub in Oklahoma is the delivery point for New York-traded crude futures.
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
