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Crude Oil Climbs as Stocks Gain, Dollar's Retreat Boosts Investment Appeal
Oil reversed earlier losses as rising equity indexes shored up prices against concern that crude inventories in the U.S. are excessive.
Crude snapped a two-day declined as European stocks and U.S. index futures climbed amid fading concern about Europe’s debt crisis. Crude supplies in the U.S. probably increased last week, according to a Bloomberg News survey before tomorrow’s Energy Department report.
“It would take a serious rise in risk aversion and bigger drop in equities to take oil below $70,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. “The market is not paying too much attention to fundamentals.”
Oil for October delivery was at $74.19 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange at 1:21 p.m. London time after falling as much as 72 cents to $73.37 a barrel. Brent crude for October was down 21 cents at $77.53 a barrel on the ICE Futures Europe Exchange in London.
Futures on the Standard & Poor’s 500 Index gained 0.3 percent at 7:35 a.m. in New York. The Stoxx Europe 600 Index advanced 0.7 percent, after dropping as much as 0.4 percent.
U.S. oil stockpiles probably rose 1 million barrels last week from 361.7 million in the week ended Aug. 27, based on the median estimate from 10 analysts before tomorrow’s Energy Department report. A report from the industry-funded American Petroleum Institute will be published later today.
Driving Season Ends
The Sept. 6 Labor Day holiday marked the end of the U.S. summer driving season, the peak gasoline-demand period. Refiners often idle processing units for maintenance in September and October as consumption of the motor fuel drops and before heating-oil use increases.
Refineries probably operated at 86.5 percent of capacity last week, down 0.5 percentage point from the prior week, according to the median estimate in the Bloomberg News survey. Gasoline inventories are expected to have fallen 1.25 million barrels last week from 225.4 million, based on the survey. Distillate fuel supplies likely climbed 700,000 barrels from 175.2 million, the survey showed.
“There is a consensus emerging that economic growth is not going to be strong enough to eat into the existing surpluses,” analysts at energy adviser Cameron Hanover Inc. in Connecticut said in a report. “We have had too many negative economic data points released over the last few weeks for us to build a convincing argument that the economy is recovering strongly.”
Hurricane and storm watches for coastal areas of Texas and Mexico were dropped by midday yesterday as Tropical Storm Hermine, the eighth named storm of the Atlantic hurricane season, weakened.
Oil futures in New York will trade in a $5 range in the short term as prices are locked in a “stalemate,” according to brokerage Newedge.
Crude for October delivery is stuck between $70.76 and $75.59 a barrel as price movements illustrated by candlestick charts show a narrow gap between the daily opening level and closing for trading on Sept. 3 and Sept. 7, said Veronique Lashinski, a Chicago-based analyst at the brokerage. That means neither buyers with expectations of rising oil nor sellers expecting a decline are able to influence direction, she said.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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