BLBG:Oil Trades at One-Week Low as Demand Concern Outweighs Iran Risk
Oil traded near the lowest level in a week in New York as rising U.S. crude inventories outweighed concern that tensions with Iran will lead to a disruption in Middle East exports.
Futures were little changed after falling yesterday as record European Central Bank lending signaled the growing risk of the region’s crisis. Crude inventories rose 9.57 million barrels last week, according to the industry-funded American Petroleum Institute. A U.S. Energy Department report today was forecast (DOEASCRD) to show supplies fell 2.5 million in a Bloomberg News survey. A U.S. aircraft carrier was seen in the area where Iran is conducting naval exercises, Islamic Republic News Agency reported, citing the navy’s Deputy Commander Mahmoud Mousavi.
“Growth concerns continue to weigh on sentiment,” said Andrey Kryuchenkov, an analyst at VTB Group in London. “Large players will remain absent until early 2012 while ongoing macro uncertainty and geopolitical risk jitters continue to deter willing buyers from entering the market just yet.”
Crude for February delivery was at $99.40 a barrel, up 4 cents, in electronic trading on the New York Mercantile Exchange at 10:47 a.m. London time. The contract closed at $99.36 yesterday, the lowest since Dec. 21. Prices are up 9 percent this year after climbing 15 percent in 2010.
Brent oil for February settlement was down 10 cents at $107.46 a barrel on the London-based ICE Futures Europe exchange. The European contract’s premium to New York crude was $8.08, compared with a record $27.88 on Oct. 14.
Fuel Stockpiles
Iran’s navy started the exercises on Dec. 24 and plans to conclude the drills on Jan. 4, state-run IRNA reported. Iran will block oil shipments through the Strait of Hormuz if sanctions are imposed on its crude exports, the news agency reported on Dec. 27, citing Vice President Mohammad Reza Rahimi.
U.S. inventories of distillate fuels, a category that includes heating oil and diesel, gained 554,000 barrels, while gasoline stockpiles rose 1.86 million barrels, the API’s weekly report showed.
The Energy Department report may show declines of 650,000 barrels in heating oil and 500,000 barrels of gasoline, according to the Bloomberg survey. The agency is scheduled to release its inventory data at 11 a.m. today in Washington, a day later than usual because of the Christmas holiday.
Gasoline demand fell by 7 percent last week to 9.8 million barrels a day, the API reported. That was the largest percentage decline since the week of Oct. 7. Distillate consumption dropped by 11 percent to 5.1 million barrels daily, the biggest change since Sept. 2, data from the group showed.
The ECB’s balance sheet soared to a record 2.73 trillion euros ($3.53 trillion) after it lent financial institutions more money last week to keep credit flowing to the economy during the debt crisis, the Frankfurt-based bank said yesterday.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
