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Oil Rises for Second Day After Report Shows Decline in U.S. Crude Supplies
Oil advanced for a second day amid evidence that stockpiles are falling as the U.S. economic recovery fans demand.
Crude climbed as much as 1.5 percent on the New York Mercantile Exchange after an American Petroleum Institute report yesterday showed crude inventories dropped the most in six months last week. U.S. Department of Energy data today will probably also show a second weekly decline, according to a Bloomberg News survey. European equities traded higher.
“It’s a good sign that crude inventories are falling,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart. “The API figures were quite bullish.”
Crude oil for July delivery gained as much as $1.11 to $73.10 a barrel in electronic trading on the New York Mercantile Exchange, and was at $73.08 at 12:59 p.m. London time. Oil has declined 7.9 percent this year in New York.
Brent crude for July delivery gained as much as 73 cents, or 1 percent, to $73.03 a barrel on the ICE Futures Europe exchange in London and was at $72.99 a barrel at 12:58 p.m. local time.
Morgan Stanley reiterated its forecast that West Texas Intermediate will end the year at $95 a barrel, in a report dated yesterday. West Texas Intermediate is traded in New York.
The API said crude inventories dropped 4.54 million barrels, or 1.3 percent, last week. That’s the biggest weekly decline since the week ended Dec. 4.
‘Positive Growth Signs’
The Department of Energy report may show crude stockpiles fell 900,000 barrels in the seven days ended June 4 from 363.2 million the week before, according to the median of 15 analysts’ estimates. The department releases the data at 10:30 a.m. in Washington today.
“The U.S. is showing signs of positive growth, which is obviously a plus for oil,” said Paul Harris, head of natural resources risk management at the Bank of Ireland in Dublin.
Confidence among U.S. small businesses rose in May to the highest level since September 2008 as executives became more upbeat about the economy six months from now, according to a private survey yesterday.
Gasoline inventories probably fell 500,000 barrels from 219 million the week before, after the Memorial Day holiday weekend marked the start of the U.S. driving season, according to the same survey. That would mark a fifth consecutive weekly decline.
“The driving season has kind of gone quiet, but it’s still there,” John Vautrain, senior vice-president at consultants Purvin & Gertz Inc., said in a Bloomberg Television interview from Singapore. “When the economy is poor or prices are high, the extent of summer driving is depressed, but it seems not to be happening this year. We are getting a good boost.”
The Organization of Petroleum Exporting Countries said in its monthly report today it will need to pump less crude than previously thought this year as production from outside the group increases more than forecast. The Paris-based International Energy Agency will publish its outlook tomorrow.
To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net
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