BLBG:Oil Gains A Second Day In New York As Stockpiles Decline
Oil gained a second day in New York before a government report that may show stockpiles dropped for the first time in 11 weeks in the U.S., the world’s biggest consumer of crude.
West Texas Intermediate futures advanced as much as 1.1 percent after rising yesterday for the first time in five days. U.S. inventories probably slipped 1 million barrels last week as refineries increased gasoline output to meet peak summer consumption, according to a Bloomberg News survey before an Energy Department report tomorrow. Supplies climbed to a 22-year high in the week ended May 25. Oil prices also rebounded after falling to a technical support level.
“We would like to see some of that substantial stockpile reduced,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “The markets seem to have come to the conclusion all at once that we were in oversold territory. West Texas has moved back into an old trading range between $82 and $88 a barrel and I expect those bounds to hold the contract over the course of this week.”
Oil for July delivery gained as much as 94 cents to $84.92 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.77 at 3:26 p.m. Sydney time. The contract yesterday rose 0.9 percent to $83.98, the highest close since May 31. Prices are 14 percent lower this year.
Brent oil for July settlement increased 43 cents, or 0.4 percent, to $99.28 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas was at $14.51, from $14.87 yesterday.
Bollinger Band
New York crude has rebounded since closing below its lower Bollinger Band on June 1 for the first time in more than three weeks, according to data compiled by Bloomberg. The indicator is at about $82.98 today. Buy orders tend to be clustered near chart-support levels.
Oil prices are unlikely to collapse as they did in 2008, according to Peter Voser, the chief executive officer of Royal Dutch Shell Plc. (RDSA) Crude is dipping because the geopolitical factors that drove it higher are becoming less dominant, he said at the World Gas Conference in Kuala Lumpur today. Prices are likely to rise in the longer term as supply struggles to meet a projected increase in global demand, he said.
Crude in New York dropped from a record high of $147.27 a barrel to $32.40 between July and December 2008 as the global recession sapped demand. It traded as high as $110.55 a barrel on March 1 this year amid speculation that international sanctions against Iran threatened supplies from the world’s fourth-biggest producer. Prices have dropped since Iran resumed talks with the West over its nuclear program.
Refinery Throughput
Companies operated U.S. refineries at 89.6 percent of capacity last week, up 0.5 percentage point from the prior week and the highest level since August, the Bloomberg survey of nine analysts showed. Supplies of gasoline and distillates, a category that includes diesel and heating oil, may have each gained 1 million barrels.
The American Petroleum Institute will release separate inventory data today. 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.
U.S. retail gasoline prices have fallen to a three-month low as crude prices plunged amid growing concern that the global economic recovery is stalling.
The average for regular gasoline at the pump was $3.585 a gallon on June 3, down 35.1 cents from a 2012 high of $3.936 on April 4, according to Heathrow, Florida-based AAA, the largest U.S. motoring group. Crude in New York closed yesterday 23 percent lower than this year’s high on Feb. 24.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
