Crude Declines After Report Shows U.S. Petroleum Stockpiles at Record High
Crude oil fell after a government report showed that U.S. petroleum inventories climbed to the highest level since at least 1990.
Combined oil and fuel stockpiles rose 196,000 barrels to 1.14 billion last week, according to the Energy Department. Supplies of crude oil and distillate fuel, a category that includes heating oil and diesel, unexpectedly dropped, sending the market to a three-week high after the report’s release at 11 a.m. in Washington.
“The headline numbers were supportive, so I understand why prices rallied immediately, but they masked a build in total inventories,” said Tim Evans, an analyst at Citi Futures Perspective in New York. “There’s still a big surplus.”
Crude oil for October delivery fell 42 cents, or 0.6 percent, to settle at $74.25 a barrel on the New York Mercantile Exchange. The contract reached $75.96, the highest intraday price since Aug. 19. Futures are up 4.1 percent from a year ago.
Brent crude oil for October settlement slipped 70 cents, or 0.9 percent, to end the session at $77.47 a barrel on the London-based ICE Futures Europe exchange.
The biggest gains were in the propane/propylene, unfinished oil and the other oils categories.
Crude oil supplies dropped 1.85 million barrels to 359.9 million in the week ended Sept. 3, the report showed. Stockpiles were 12 percent higher than the five-year average. Inventories were forecast to climb by 1 million barrels, according to the median of 15 responses in a Bloomberg News survey of analysts.
Distillate stockpiles declined 388,000 barrels to 175 million. The decrease left supplies 24 percent above average, and near the 27-year high touched in the week ended Aug. 20. Inventories were forecast to increase 700,000 barrels.
Gasoline Inventories
Gasoline supplies declined 243,000 barrels to 225.2 million. Stockpiles were forecast to fall 1 million barrels, according to the median of responses.
Gasoline for October delivery declined 0.4 cent to settle at $1.9354 a gallon in New York. Heating oil for October settlement fell 1.33 cents, or 0.6 percent, to $2.0684 a gallon.
“These numbers don’t change the fundamental picture,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. “Inventories are still ample and we’ll need something more to move the market out of its recent range.”
Price Range
Oil prices fluctuated over the past month as reports gave a mixed picture of the U.S. economic recovery. Futures have traded within an $11 price range for the past month, from $70.76 to $81.76 a barrel.
Organization for Economic Cooperation and Development said in a report today that the U.S. economy will slow to 1.2 percent in the next quarter from 2 percent.
“The market has been stuck in a range,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “This is a good price for OPEC, and consumers aren’t complaining. There aren’t a lot of headlines out there about high prices, which is what OPEC wants.”
OPEC will reduce crude shipments by 0.6 percent this month as the global recovery slows and refiners conduct maintenance, Oil Movements said, the eighth weekly decline reported by the tanker-tracker.
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude oil, will ship 23.17 million barrels a day in the four weeks to Sept. 25, down from 23.3 million in the month ended Aug. 28, the Halifax, England-based consultant said today in a report. The data exclude Ecuador and Angola.
Oil Glut
“We know there is still a significant crude overhang in the Atlantic basin,” Oil Movements founder Roy Mason said by phone from Halifax. “What’s happening now is western demand is dropping off. The scale of it is fairly unusual. It’s the kind of thing that would happen in the runup to a market downturn.”
OPEC said today in a monthly report that global consumption may weaken during the rest of this year because of “the severity of the economic crisis and its prolonged impact on the world economy.”
The group predicted that the world will need 28.8 million barrels of oil a day from its 12 members next year. That’s about 100,000 barrels less than in last month’s report.
Oil volume on the Nymex was 643,079 contracts as of 2:34 p.m. in New York. Volume totaled 758,980 contracts yesterday, 22 percent above the average of the past three months. Open interest was 1.35 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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