U.S. Commodities: Oil Rises as Supplies Drop More Than Forecast

Crude oil climbed after a U.S. government report showed stockpiles plunged the most since 2002 as imports tumbled and refineries bolstered fuel output.

The Energy Department said inventories fell 9.85 million barrels last week to 346 million. The price rally was tempered as the stockpile decline was concentrated on the Gulf Coast. Supplies were forecast to drop by 2.5 million barrels, according to a Bloomberg survey. Imports decreased 15 percent to the lowest level since September 2008.

“The crude numbers are shocking,” said Andre Julian, the chief financial officer and senior market strategist at OpVest Wealth Management in Irvine, California. “A near-term shortage of crude in the U.S. is forming.”

In other markets, gold fell the most in a week on speculation that the dollar will extend a rally, eroding demand for the precious metal as an alternative asset. Cotton also dropped. The UBS Bloomberg Constant Maturity Commodity Index declined 0.2 percent to 1,578.21.

Oil futures for January delivery rose 34 cents, or 0.4 percent, to close at $88.62 a barrel on the New York Mercantile Exchange, the highest settlement price since Dec. 7. The price has climbed 25 percent in the past 12 months.

The inventory data “isn’t as bullish as it first appeared,” said Stephen Schork, the president of Schork Group Inc., a consulting company in Villanova, Pennsylvania. “The draw was on the Gulf Coast, where refineries delay deliveries because they want to dodge their tax bills. Given the time of year and where it occurred, I can’t get that excited.”

Gold

Gold futures for February delivery fell $18.10, or 1.3 percent, to settle at $1,386.20 on the Comex in New York, the biggest decline for the most-active contract since Dec. 8.

The greenback rose against the euro and the yen as U.S. economic data pointed to a recovering economy with a low inflation rate. The U.S. consumer-price index increased 0.1 percent in November. Gold has gained 26 percent this year, reaching a record $1,432.50 an ounce on Dec. 7.

“As economic activity looks to improve, that’s going to strengthen the dollar and hurt gold,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “The inflation numbers also took gold down a little bit. If you’re buying these commodities to hedge against inflation, today’s data didn’t show that you were right in doing so yet.”

Cotton

Cotton futures fell for the first time in six sessions on speculation that demand will drop and plantings will increase in the U.S. after prices surged 88 percent this year.

Acreage may expand at least 10 percent in the Southwest, according to John Robinson, a professor and extension economist at Texas A&M University in College Station. Texas is the largest cotton-producing state, and the U.S. is the world’s leading exporter. Yesterday, the fiber traded 6 cents below the record $1.5195 a pound.

“Current higher prices may slow purchases by overseas importers and encourage U.S. farmers to increase crop acreage,” said Hiroyuki Kikukawa, the general manager of research at IDO Securities Co. in Tokyo.

Cotton for March delivery fell 2.35 cents, or 1.6 percent, to settle at $1.4214 on ICE Futures U.S. in New York, the biggest drop since Nov. 26. The price jumped 11 percent in the previous five sessions.

Commodities settled as follows:

Precious metals: February gold down $18.10 to $1,386.20 an ounce March silver down 53.5 cents to $29.253 an ounce January platinum down $9.50 to $1,704.40 an ounce March palladium down $15.55 to $752.65 an ounce

Livestock: February live cattle down 0.625 cent to $1.039 a pound March feeder cattle down 0.425 cent to $1.184 a pound February lean hogs down 0.925 cent to 75.2 cents a pound February pork bellies up 0.75 cent to $1.06 a pound

Grains: March soybeans up 1.75 cents to $13.0775 a bushel March corn down 3 cents to $5.8425 a bushel March wheat up 1.5 cents to $7.6475 a bushel March oats down 1.5 cents to $3.835 a bushel

Food and Fiber: March coffee up 0.8 cent to $2.175 a pound March cocoa up $39 to $2,979 a metric ton March cotton down 2.35 cents to $1.4214 a pound March sugar up 0.33 cent to 31.11 cents a pound January orange juice down 4.05 cents to $1.56 a pound

Energy: January crude oil up 34 cents to $88.62 a barrel January natural gas down 3.3 cents to $4.222 per million British thermal units January heating oil up 1.56 cents to $2.4835 a gallon January gasoline up 1.28 cents to $2.3092 a gallon

Others: March copper down 7.65 cents to $4.1325 a pound March lumber up $10 to $294 per 1,000 board feet

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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