BLBG:Oil Trades Near One-Month High as Israel Unrest Threatens Supply
Oil traded near the highest price in a month in New York as concern that Middle East unrest will disrupt supplies countered speculation stockpiles rose for a third week in the U.S.
Futures were little changed after climbing 2.7 percent yesterday as Israeli ground forces prepared to enter the Gaza Strip for the first time in almost four years. The Middle East accounted for more than 35 percent of global production in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. In the U.S., the world’s biggest crude user, inventories probably increased by 1 million barrels last week, according to a Bloomberg survey before an Energy Department report tomorrow.
“The situation in the Middle East came at a time when there was a risk-on move in the markets, and that fed through into oil,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “At this stage, the fact is that inventory levels and supply capacity are large.”
Crude for January delivery was at $89.06 a barrel in electronic trading on the New York Mercantile Exchange, down 22 cents, at 1:26 p.m. Singapore time. The contract surged $2.36 to $89.28 yesterday, the highest close since Oct. 19. Prices have declined 9.9 percent this year.
Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $111.63 a barrel, down 7 cents. The European benchmark crude was at $22.57 premium to New York contracts, from $22.42 yesterday.
Israeli Conflict
The conflict in Gaza threatens further instability in the Middle East and North Africa after a wave of uprisings since last year, including one in Libya that almost entirely cut crude exports from the north African producer. Israeli leaders have said that all options, including a military strike, are justified in countering what they describe as an existential threat from Iran, the fifth biggest oil producer in the Organization of Petroleum Exporting Countries.
World leaders including U.S. President Barack Obama have called for an end to the escalating dispute with Gaza. Israel deployed tanks near its border, threatening the first ground invasion of Gaza since an assault that began in December 2008 and left more than 1,100 Palestinians and 12 Israelis dead.
Oil’s advance in New York is stalling as futures reach technical resistance along the 50-day moving average, according to data compiled by Bloomberg. This indicator is at $89.80 a barrel today. Sell orders tend to be clustered near chart- resistance levels.
U.S. crude stockpiles climbed to 375.9 million barrels in the week ended Nov. 9, the Energy Department said in a report on Nov. 15. That was the highest since July 20.
Supply ‘Abundance’
“There’s an abundance of oil out there,” Jacob Correll, a Louisville, an analyst at Summit Energy Inc. in Kentucky, which manages more than $20 billion in companies’ annual energy spending, said yesterday. “The numbers don’t lie. They are indicative of good supply and increasing production especially in the Midcontinent.”
Crude output rose 32,000 barrels a day to 6.71 million in the week to Nov. 9, the fastest rate since May 1994, the department’s report showed. Production was up for 10 weeks, the longest string of gains since 2008. Inventories also may have increased as Phillips 66’s 238,000 barrel-a-day Bayway refinery in New Jersey remained shut after Hurricane Sandy, which hit the East Coast on Oct. 29.
Gasoline supplies probably climbed 1 million barrels last week, according to the median estimate of seven analysts surveyed by Bloomberg before tomorrow’s report. Distillate-fuel inventories, including heating oil and diesel, are expected to have dropped 1 million barrels.
The industry-funded American Petroleum Institute in Washington will publish its own stockpile data today.
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
