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Crude-Oil Futures Fall From Two-Week High as Supplies Climb, Equities Drop
Oil slipped from a two-week high as equities retreated, while rising U.S. inventories spurred speculation that a recovery in demand is failing to take root.
Futures fell as much as 0.9 percent as European equity markets reversed earlier gains. The industry-funded American Petroleum Institute said yesterday that U.S. crude, distillate and gasoline stockpiles gained last week.
Oil for August delivery fell as much as 70 cents to $76.45 a barrel in electronic trading on the New York Mercantile Exchange and traded for $76.55 as of 1:29 p.m. London time. Yesterday, the contract jumped 2.9 percent to $77.15, the highest level since June 28.
“While fundamentals in Europe and the U.S. remain problematic, the oil price in the last 24 hours has defied gravity,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “The market will struggle to penetrate $78.”
Brent crude for August settlement declined 42 cents to $76.23 a barrel on the London-based ICE Futures Europe exchange. The August Brent contract expires tomorrow. The more active September contract fell 50 cents to $76.23 a barrel.
The industry-funded American Petroleum Institute said yesterday that U.S. crude, distillate and gasoline stockpiles gained last week. Crude stockpiles increased 1.74 million barrels to 353.5 million, according to the API report.
Energy Department Report
The Energy Department is scheduled to release its weekly report at 10:30 a.m. today in Washington. The report may show that inventories fell 1.5 million barrels last week from 358.2 million, a Bloomberg News survey showed.
Refineries probably operated at 89.8 percent of capacity last week, unchanged from the previous week, according to the median of analyst responses. Utilization rates in the week ended July 2 were at the highest level since January 2008.
Analysts were split over whether gasoline inventories increased or declined last week. Supplies probably rose 350,000 barrels from 219.4 million, according to the survey. Fourteen respondents gave product-supply forecasts. Seven analysts anticipated an increase, five said there was a decline, and two estimated no change.
Crude oil in New York must challenge resistance around $80 a barrel to move higher, or test support at $72.50, to break out of its range, according to Veronique Lashinski, a senior research analyst for Newedge USA LLC in Chicago.
New York oil for September delivery, which will become the front-month contract on July 21, touched $80.82 a barrel on June 21 on the New York Mercantile Exchange, the highest price since May 14. The contract fell 65 cents to $76.94 a barrel today after rising $2.15, or 2.9 percent, yesterday.
The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supply, will release its monthly market report tomorrow. Yesterday, the International Energy Agency forecast that global oil demand will increase at a slower pace next year, as advanced nations trail China and other developing countries, in its first assessment of 2011.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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