Oil Trades Near Lowest in a Week on Concern Economic Recovery Is Faltering
Oil traded near its lowest in a week in New York on concern that the global economic recovery is faltering and fuel demand will decline.
Crude stockpiles climbed the most in more than a month, according to the American Petroleum Institute. The Energy Department will release its own data later today. The Organization of Petroleum Exporting Countries is likely to keep production levels steady when it meets next week, according to a Bloomberg survey. An official at one of OPEC’s Middle East members said output needs to be raised by as much 1 million barrels a day.
“Global risk sentiment is dominating trading, with fears for weakening energy demand overwhelming concerns about long- term supply tightness,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.
Crude for July delivery was at $100.21 a barrel at 1:30 p.m. London time in electronic trading on the New York Mercantile Exchange, having lost as much as $1.04 to $99.25. The contract yesterday declined $2.41, or 2.4 percent, to $100.29, the biggest drop since May 11. Prices are up 38 percent in the past year.
Brent crude for July delivery was at $115.08 a barrel, up 55 cents, on the London-based ICE Futures Europe exchange. The contract yesterday fell $2.20, or 1.9 percent, to $114.53, the lowest settlement since May 24.
The European benchmark contract traded at a premium of $14.87 a barrel to U.S. futures. The difference between front- month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.
The industry-funded American Petroleum Institute said U.S. crude supplies rose 3.5 million barrels last week to 371.6 million. An Energy Department report at 11 a.m. in Washington is forecast to show stockpiles declined 1.6 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.
Gasoline inventories climbed 1.5 million barrels to 212.7 million, the API said. The Energy Department report may show a 900,000 barrel increase for the fuel, the survey shows.
API ‘Looked Negative’
“The American Petroleum Institute crude inventory data looked negative, with a surprising rise in crude and gasoline stockpiles,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. If Energy Department data “confirms today’s bearish numbers, prices could remain under pressure.”
Oil-supply totals from the API and the Energy Department have moved in the same direction 72 percent of the time over the past year. 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.
Output rose 165,000 barrels, or 0.6 percent, to average 28.895 million barrels a day, according to the survey of oil companies, producers and analysts. Saudi Arabia bolstered output by 75,000 barrels, or 0.8 percent, to 8.925 million barrels a day, the highest level since October 2008. Nigerian production rose 75,000 barrels a day to 2.06 million last month.
The group won’t announce any supply increase and will keep its formal quota unchanged for an eighth consecutive meeting at its June 8 gathering, 27 of 30 analysts said.
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