BLBG:Oil Trades Near One-Week High; Goldman Sees Demand Gain
Oil traded near the highest level in a week in New York after the American Petroleum Institute said crude inventories fell in the U.S., the world’s biggest consumer of the commodity.
U.S. stockpiles decreased by 985,000 barrels last week, the industry-funded API said. An Energy Department report today is forecast to show a gain of 2.8 million barrels. Goldman Sachs Group Inc. said crude prices will rise as demand growth outpaces production capacity and that increased output by Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, has left the group’s spare capacity at less than 1 million barrels a day.
“There might be some speculative buying ahead of the Energy Department numbers,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, who last month correctly predicted prices had peaked in the short term. “But U.S. demand remains weak before the driving season, and inventories high, so in the absence of the geopolitical issues, markets would justify lower prices.”
Crude for June delivery advanced as much as 60 cents, or 0.6 percent, to $104.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $104.07 at 9:13 a.m. London time. U.S. crude rose 44 cents to $103.55 yesterday, the highest close since April 17. Prices are 5.3 percent higher this year.
Brent oil for June settlement gained 49 cents to $118.65 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $14.58 over West Texas Intermediate crude, little changed from yesterday.
Downward Trend
Oil’s advance in New York may stall as futures remain in a technical downward trend, according to data compiled by Bloomberg. On the daily chart, the top of a downward-sloping channel extending back about two months is $104.38 a barrel today and represents technical resistance, where sell orders tend to be clustered.
Gasoline stockpiles decreased 3.64 million barrels and distillate-fuel inventories dropped 3.56 million barrels, the API’s weekly report showed. Today’s Energy Department data may show a 1.5 million-barrel decline in gasoline supplies, according to the median of 11 estimates in a Bloomberg News survey of analysts. Distillates are predicted to gain 500,000 barrels.
The government requires that reports be filed with the Energy Department for its weekly survey. The API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines.
Goldman View
Oil prices will rise as demand is expanding faster than production capacity even as the global economy slows, Goldman Sachs (GS) said in a report e-mailed today.
“It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand,” said Jeffrey Currie, head of commodities research at Goldman Sachs in London.
The bank Goldman reiterated a recommendation to buy September futures for West Texas Intermediate oil.
The International Energy Agency said on April 12 in its most recent monthly Oil Market Report that OPEC’s “effective” spare capacity declined to an estimated 2.54 million barrels a day in March from 2.75 million the previous month. That figure excludes Iraq, Nigeria, Libya and Iran, said the IEA, an adviser to the world’s biggest industrialized nations.
Gasoline Prices
U.S. gasoline prices at the pump fell below year-earlier levels for the first time since at least October 2009, according to data from AAA, the largest U.S. motoring club. The national average price for regular gasoline slid 0.9 cent on April 23 to $3.849 a gallon, according to Heathrow, Florida-based AAA. That’s down from $3.86 a year earlier and the lowest level since March 19.
Demand for the motor fuel was little changed last week and lower than consumption a year earlier, according to MasterCard Inc. Drivers bought 60.81 million barrels of gasoline in the week ended April 20, versus 60.8 million the week before, MasterCard’s SpendingPulse report showed. That was 6.1 percent below the year-earlier level, the 34th straight decline in that measure.
The Arabian Gulf Oil Co., Libya’s largest crude producer, warned that it may have to cease production because of protests, according to the state-run Libya News Agency. Arabian Gulf, or Agoco, will have to shut its oil fields if protesters blocking the entrance to its offices in Benghazi do not disperse, Jalil Mayouf, a company spokesman, was quoted by Libya News as saying. He didn’t explain why fields hundreds of miles away from the office would be shut.
The demonstrators are demanding jobs for unemployed young people and greater transparency on government spending. Agoco said last month that it expected to reach full capacity of 425,000 barrels a day by the end of April, or about 25 percent of Libya’s pre-war output of 1.6 million barrels a day.
To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
