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Crude Oil Pares Gains on Concern Report to Show Increase in U.S. Supplies
Oil rose for a second day on speculation that a government report today may show a smaller increase in crude inventories than previously forecast.
U.S. crude stockpiles fell 7.31 million barrels last week, the industry-funded American Petroleum Institute reported yesterday, which may lead traders to revise expectations for U.S. Energy Department data due today. A Bloomberg survey earlier this week forecast that the government report will show crude supplies climbed by 1 million barrels.
“The API drawdown was massive,” said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo. “The DOE and API often go in the same direction but the sizes are different. But there’s more than enough oil in the market.”
Crude for October delivery on the New York Mercantile Exchange gained as much as 60 cents, or 0.8 percent, to $75.27 a barrel, and traded for $75.06 as of 9:25 a.m. London time. Brent crude for October settlement was at $78.05 a barrel, down 12 cents, on the London-based ICE Futures Europe exchange.
Brent cost $3.14 a barrel more than Nymex futures today. The difference was at $3.65 on Sept. 7, the widest spread between the two exchanges’ most-active contracts since May 20.
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s crude, will deliver its monthly report today. The International Energy Agency, the energy security adviser of the Organization for Economic Cooperation and Development, will issue its own report tomorrow.
Refining Rates
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.
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 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.
“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.”
‘Triangle’ Formation
Prices may drop to a lower trading range if prices decline below $71.10 a barrel, according to technical analysis by Petromatrix GmbH.
West Texas Intermediate crude’s weekly candlestick price chart shows oil fluctuating within a “triangle” formation. A drop below the bottom line of this triangle, now at $71.10 a barrel, may trigger an accelerated fall to lower prices, according to the Zug, Switzerland-based energy consultants.
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: Grant Smith in London at gsmith52@bloomberg.net
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