BLBG:Oil Trades Near One-Week Low on U.S. Stockpiles, Demand Outlook
Oil traded near the lowest level in a week in New York before a report forecast to show U.S. stockpiles rose to the highest since July and after the International Energy Agency cut its demand forecasts.
Futures were little changed after dropping for a second day yesterday. U.S. crude inventories probably climbed to 377.3 million barrels last week, according to a Bloomberg survey before government data tomorrow. Global oil consumption this quarter will average 90.1 million barrels a day, 290,000 a day less than forecast last month, the IEA said yesterday, citing weakness in Europe’s economy. The market is “very well- supplied,” according to OPEC’s secretary-general.
“Supply is there to meet demand,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney, who estimates support for New York crude at $85 a barrel. “Europe will remain the problem. What the market has realized is that fiscal austerity hasn’t worked.”
Crude for December delivery was at $85.43 a barrel, up 5 cents, in electronic trading on the New York Mercantile Exchange, at 1:23 p.m. Singapore time. The contract declined 19 cents to $85.38 yesterday, the lowest close since Nov. 8. Prices have lost 14 percent this year.
Brent oil for December settlement, which expires tomorrow, was down 5 cents at $108.21 a barrel on the London-based ICE Futures Europe exchange. The more actively traded January contract slid 7 cents to $107.27. The European benchmark crude was at a premium of $22.78 to New York futures. The spread narrowed for the first time in three days to $22.88 yesterday.
Price Outlook
Brent will trade in a range of $105 to $115 a barrel through the end of this year. Gordon Kwan, the head of regional energy research for Mirae Asset Securities Ltd. in Hong Kong, said in a report today.
New York crude may accelerate losses as a so-called “death cross” forms on the technical chart, according to data compiled by Bloomberg. The 50-day moving average is below the 100-day mean today for the first time since Sept. 7. Investors typically sell contracts when a moving average indicator drops under a longer-term one.
Global oil demand will expand by 670,000 barrels a day this year to 89.6 million, the Paris-based IEA said in its monthly report, cutting 60,000 barrels a day from its previous forecast. The Organization of Petroleum Exporting Countries will need to supply 30 million barrels a day this quarter, 500,000 fewer than the previous projection, because of the weaker demand outlook and increased supply from non-OPEC producers. Daily global consumption will rise by 830,000 barrels to 90.4 million next year, 70,000 less than last month’s prediction.
U.S. Supplies
OPEC is unlikely to cut production when the 12-member group gathers in Vienna on Dec. 12, Secretary-General Abdalla El-Badri said in an interview in London yesterday. OPEC, which pumps about 40 percent of the world’s oil, has an output ceiling of 30 million barrels a day.
U.S. crude stockpiles probably increased 2.5 million barrels last week to the highest level since July 20, according to the median estimate of nine analysts surveyed by Bloomberg News before the Energy Department report. The country is the world’s largest oil consumer.
Gasoline stockpiles fell 500,000 barrels, the survey showed. Distillate-fuel inventories, including heating oil and diesel, are expected to have declined 900,000 barrels.
The Energy Department in Washington is releasing supply data a day late because of the Veterans Day holiday on Nov. 12. The industry-funded American Petroleum Institute will publish its stockpile report today.
U.S. gasoline demand decreased 0.8 percent last week to the lowest level since March as Hurricane Sandy disrupted travel and supplies on the East Coast for a second week, according to MasterCard Inc. (MA) Drivers bought 8.39 million barrels a day of the motor fuel in the week ended Nov. 9, the second-biggest payments network company said yesterday in its SpendingPulse report.
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
