SF: Oil Falls as U.S. Crude Output Rises to Highest Level Since 1996
Oct. 3 (Bloomberg) -- Oil fell to a two-month low in New York after a government report showed that U.S. crude output climbed to the highest level in more than 15 years and fuel consumption decreased.
Futures dropped as much as 3.5 percent after the Energy Department said crude output rose 11,000 barrels a day to 6.52 million last week, the most since December 1996. Total fuel demand fell 0.3 percent to 18.3 million barrels a day in the four weeks ended Sept. 28, the lowest level since April. Gasoline supplies increased as stockpiles of crude oil and distillate declined.
“There’s plenty of supply,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in Chicago. “We’re going lower. The demand picture is looking poor and the market’s in the midst of a downtrend.”
Crude oil for November delivery declined $3.02, or 3.3 percent, to $88.87 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Oil traded at $89.62 a barrel before release of the inventory report at 10:30 a.m. Futures touched $88.64, the lowest level since Aug. 3.
Brent oil for November settlement decreased $3.06, or 2.7 percent, to $108.51 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $19.64 to the New York-traded West Texas Intermediate grade, down from $19.68 yesterday.
Crude oil supplies dropped 482,000 barrels to 364.7 million barrels, the Energy Department said today. Inventories were forecast to increase 1.5 million barrels, according to the median of 11 analyst estimates in a Bloomberg survey.
Gasoline Inventories
Gasoline inventories rose 114,000 barrels to 195.9 million last week, the department said. Stockpiles of distillate fuel, a category that includes heating oil and diesel, tumbled 3.67 million barrels to 124.1 million.
Futures declined before the report as a measure of China’s economy fell, signaling fuel demand may decline in the world’s second biggest user of the commodity. Chinese services industries expanded at the weakest pace since at least March 2011, while euro-area services and manufacturing output contracted.
“Energy markets appear to be moving on concerns about weakening demand,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The Chinese non- manufacturing data seems to signal that we’ll be seeing less fuel use.”
China’s services purchasing managers’ index fell to 53.7 in September from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing today. The number was lower than any previous reading in data compiled by Bloomberg starting in March 2011. Readings above 50 indicate expansion. Similar measures for manufacturing industries have shown contractions for last month.
Services Reports
A euro-area composite index based on a survey of services and manufacturing purchasing managers fell to 46.1 in September, from 46.3 in August, London-based Markit Economics said today. In Germany, the region’s largest economy, France and Italy, the services indicators were all below 50 last month. The gauge for Spain dropped to 40.2 from 44.
In Britain, a service measure dropped more than economists forecast to 52.2 in September from 53.7. Markit said the underlying trend in the U.K. economy is near stagnation.
--Editors: Margot Habiby, Dan Stets
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
