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Crude Rises on Speculation U.S. Inventory Growth Fell Short of Estimates
Oil pared gains in New York amid speculation U.S. stockpiles will increase as demand in the world’s largest oil-consuming nation falls with the end of the peak summer demand period.
An Energy Department report today will probably show U.S. crude supplies climbed 1 million barrels last week, according to the median of 15 estimates in a Bloomberg News survey. Gasoline demand slid to the lowest level in six months last week, according to MasterCard Inc.’s SpendingPulse report yesterday.
“Now is the time between the demand periods,” said Ken Hasegawa, a commodity derivative sales manager at Newedge Group in Tokyo. “Summer is done and winter demand hasn’t started. The level of crude and product inventories is much higher than the five-year average.”
Crude for October delivery on the New York Mercantile Exchange was at $74.81 a barrel, up 14 cents, in electronic trading at 3:14 p.m. Singapore time. The contract earlier gained as much as 60 cents, or 0.8 percent, to $75.27. Yesterday, it added 58 cents to $74.67, ending a two-day drop. Futures have declined 5.7 percent this year.
U.S. motorists bought an average 9.13 million barrels a day of gasoline in the week ended Sept. 3, down 0.5 percent from the prior week, the Mastercard report showed. It was the lowest level since Feb. 12 and the third weekly drop.
An Energy Department report will probably show U.S. motor fuel stockpiles declined 1 million barrels last week, based on the Bloomberg News survey. Distillate inventories probably gained 700,000 barrels, the survey showed.
Crude Supplies
U.S. crude stockpiles fell 7.31 million barrels last week, the industry-funded American Petroleum Institute said yesterday. Gasoline supplies rose 654,000 barrels, the group said.
“The crude oil market is not so strong even with the drop in API numbers,” said Hasegawa at Newedge.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
U.S. refiners probably cut crude-processing rates to the lowest level since April as they began seasonal maintenance. Refineries operated at 86.5 percent of capacity last week, down 0.5 percentage point from a week earlier, according to the median of 14 analyst estimates in the survey.
The Energy Department is scheduled to release its weekly supply report at 11 a.m. today in Washington, a day later than usual because of the Labor Day holiday on Sept. 6.
OPEC Production
The Organization of Petroleum Exporting Countries, a 12- member group that pumps 40 percent of the world’s crude, will deliver its monthly report today. The International Energy Agency, the energy security watchdog of the Organization for Economic Cooperation and Development, will issue its own report tomorrow.
Brent crude for October settlement was at $78.30 a barrel, up 13 cents, on the London-based ICE Futures Europe exchange. It earlier climbed as much as 39 cents, or 0.5 percent, to $78.56. Yesterday, the contract gained 43 cents, or 0.6 percent, to $78.17, the highest settlement since Aug. 10.
Brent cost $3.48 a barrel more than Nymex futures today. The spread was at $3.65 on Sept. 7, the widest between the most- active contracts on the two exchanges since May 20.
The dollar strengthened against the euro on bets economic growth in the 16-nation region is slowing, damping investor demand for commodities. The U.S. currency was at $1.2688 per euro from $1.2720 yesterday in New York.
Saudi Arabia
Saudi Arabian Oil Co., the world’s largest state-owned oil company, will supply full contractual volumes of crude to Asian customers for loading next month, according to refinery officials in Japan and South Korea.
Saudi Aramco, as the company is known, will provide 100 percent of cargoes sold under long-term contracts for an 11th month, according to a survey of refinery officials, all of whom asked to remain unidentified, citing confidentiality agreements with the Middle East producer.
Tropical Storm Igor, the ninth named storm of the 2010 Atlantic hurricane season, is moving west away from the Cape Verde Islands at 7 miles (11 kilometers) per hour, according to an advisory from the U.S. National Hurricane Center at 11 p.m. Miami time. Slow strengthening is forecast over the next 48 hours and it could become a hurricane by then, the center said.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net
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