BLBG:Oil Falls From One-Week High; BofA Boosts 2012 Forecsts
Oil declined from the highest price in a week in New York after data showed Saudi Arabian crude output at close to the largest level in three decades.
Futures fell as much as 0.5 percent after climbing the most in more than three weeks on March 16. Saudi Arabia, the largest producer in OPEC, pumped 9.87 million barrels a day in January, according to data submitted to the Joint Organization Data Initiative. Oil also retreated today as the dollar advanced versus the euro, undermining investor appetite to protect against inflation. Bank of America Corp. raised price forecasts for this year amid reduced supply.
“There’s no immediate supply shortage,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who correctly predicted last month that prices had peaked in the short-term. “As Brent gets past $120, market participants start worrying about demand and hence you’re getting extremely choppy trading at the moment. It’s unlikely we’ll see a sustained push higher from here.”
Oil for April delivery was at $106.86 a barrel, down 20 cents, in electronic trading on the New York Mercantile Exchange at 9:28 a.m. London time. The contract, which expires tomorrow, climbed 1.9 percent to $107.06 on March 16, the highest close since March 9. The more actively traded May future dropped 20 cents to $107.38 today.
Brent oil for May settlement was at $125.05 a barrel, down 76 cents, on ICE Futures Europe exchange in London. The European benchmark contract was at a premium of $17.85 to New York futures for the same month.
Saudi Output
Bank of America Corp. raised its 2012 oil price forecasts to $118 a barrel for Brent crude and to $106 for West Texas Intermediate because of supply constraints, according to an e- mailed report today. While Brent may temporarily rise to $140, further price gains “will prove unsustainable and create risks to the economy,” New York-based head of commodities research Francisco Blanch wrote.
Saudi Arabia’s January crude output rose 0.6 percent from December and compares with 10.05 million barrels a day in November. The U.S. Energy Department said November’s increase was the largest in at least 31 years.
Oil exports from the kingdom climbed 2 percent in January to 7.5 million barrels a day, the JODI data show. Shipments by Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries, climbed to 2.3 million barrels, the highest since December 2008. JODI is supervised by the Riyadh-based International Energy Forum and compiles data provided by member governments.
‘Bumpy Ride’
Oil prices will have a “bumpy ride in the months ahead” because of a “slim buffer” of spare crude-production capacity, the International Energy Agency said in its monthly market report on March 14. World oil supplies are “tight” with spare capacity at about 2.5 million barrels a day compared with 3.5 million in 2008 to 2010, U.S. Deputy Secretary of Energy Daniel Poneman said the same day.
Home purchases in the U.S. probably rose in February to the highest level in almost two years, a sign of stabilization in the real-estate market, according to Bloomberg News surveys of economists before reports this week.
“We’re looking at a period of moderate growth in the U.S., and the outlook has picked up,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who sees WTI trading in a range of about $104 to $108. “If it continues on from here up into $108 plus, that would start to look as though it was making a bit more of a positive statement in terms of breaking resistance from a technical point of view.”
Bullish Dollar
Sentiment among currency traders on the dollar has been bullish for the longest period since 1999, a sign that the market sees the U.S. resuming its role as the engine of global economic growth.
Futures anticipating a stronger dollar against its developed-market peers have outnumbered those predicting a drop for 26 consecutive weeks through the five days ended March 13, according to Commodity Futures Trading Commission data. That’s the longest streak since the start of a three-year rally in the world’s reserve currency 13 years ago.
The U.S. currency was 0.2 percent stronger against the euro at $1.3149.
Hedge funds decreased oil wagers on rising prices by 6,188, or 2.5 percent, to 258,406 contracts in the seven days ended March 13, according to the CFTC’s Commitments of Traders report.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
