BLBG:Oil Falls a Sixth Day in New York as U.S. Stockpiles Gain
Oil fell for a sixth day in New York, the longest losing streak in almost two years, after stockpiles rose in the U.S. and Saudi Arabia’s Oil Minister Ali al-Naimi said the world is oversupplied with crude.
Futures slid as much as 0.5 percent after dropping 8.6 percent in the past five days. U.S. inventories increased 7.8 million barrels last week to 378 million, the highest level since August 1990, according to data from the American Petroleum Institute. A government report today may show supplies rose 2 million barrels, according to a Bloomberg News survey. There is surplus oil in the market, al-Naimi said in Tokyo.
“The big API increase in crude-oil stocks should be bearish for oil prices,” said Ken Hasegawa, a commodity- derivative sales manager at Newedge Group in Tokyo who says New York oil will trade between $95 and $100 a barrel.
Crude for June delivery fell as much as 51 cents to $96.50 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.51 at 2:41 p.m. Sydney time. It slipped 1 percent yesterday to $97.01, the lowest close since Feb. 6. Front-month prices are down 2.3 percent this year. The six-day decline is the longest since July 2010
Brent oil for June settlement was at $112.31 a barrel, down 0.4 percent, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $15.73, from $15.72 yesterday.
Price Projections
The U.S. Energy Department reduced its 2012 price projections for crude and gasoline as supply is forecast to expand faster than fuel consumption. New York crude will average $104.12 a barrel this year, down 1.5 percent from the April forecast of $105.72, the department’s Energy Information Administration said yesterday in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $103.75 in 2013, down $2 from the prior month’s estimate.
Regular gasoline at the pump will average $3.71 a gallon this year, down from a projection of $3.81 in April, the department predicted. It will average $3.79 a gallon from April through September, the peak demand period.
Pump prices may have reached their annual peak at the earliest in 14 years amid rising oil supply, easing Middle East tensions and the takeover of refineries that were threatened with closing. Prices have slipped 15.1 cents since reaching a 2012 high of $3.941 a gallon on April 2, the Energy Department said.
Gasoline Stockpiles
U.S. gasoline stockpiles fell 5 million barrels last week, figures from the industry-funded API show. They are forecast to drop 750,000 barrels, according to the median estimate of 12 analyst surveyed by Bloomberg News before the government report. Distillate supplies, a category that includes heating oil and diesel, slid by 2.7 million barrels compared with a projected gain of 125,000.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Commodities erased their gain for the year yesterday before paring declines. The Standard & Poor’s GSCI Spot Index fell as much as 1.6 percent to 641.8, the lowest since Dec. 29, before closing down 0.6 percent at 648.6. The last annual slump was in 2008. The measure was at 647.7 today.
Technical Support
Oil’s decline in New York may stall as the 14-day relative strength index approaches 30, a threshold that typically signals prices have fallen too far and further losses may not be sustained. The measure was at 30.3 today, according to data compiled by Bloomberg. Futures also have yet to settle lower than the 200-day moving average, signaling technical support, after trading below it the past two days. This indicator is at $96.29 a barrel today.
Investors should buy Brent crude at $110 a barrel and West Texas Intermediate oil at $95 a barrel, according to Societe Generale SA.
“The oil markets are still in correction mode but we don’t expect it to last much longer,” Mike Wittner, the head of oil market research at Societe Generale in New York, said in a report e-mailed today. “We feel good about saying that by the end of May, crude prices will have turned north again.”
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
