Oil Drops After Biggest Gain in Six Weeks on Outlook for Supply
Oil fell after the biggest gain in six weeks as a forecast for rising inventories in the U.S., the world’s biggest crude consumer, signaled demand may be easing.
Futures slid as much as 0.5 percent in New York. U.S. crude stockpiles probably rose a second week to the highest level since August, according to a Bloomberg News survey before an Energy Department report tomorrow. Prices advanced yesterday after U.S. manufacturing in March expanded at a faster pace than estimated. Oil has climbed this year amid concern tension with Iran will disrupt global supplies.
“Demand has been so subdued for many months now and we can’t really see that picking up,” said David Lennox, an analyst at Fat Prophets in Sydney. Oil prices are at this level because of Iran, and “traders aren’t willing to let go of that risk premium,” he said.
Oil for May delivery slid as much as 57 cents to $104.66 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.72 at 3:10 p.m. Singapore time. It climbed 2.2 percent yesterday, the most since Feb. 21, to $105.23. Prices are 6 percent higher this year.
Brent oil for May settlement fell 57 cents, or 0.5 percent, to $124.86 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York- traded West Texas Intermediate was at $20.14, compared with $20.20 yesterday, the widest since October.
U.S. crude inventories may have gained 2.2 million barrels last week, according to the median of eight analyst estimates in the Bloomberg News survey. Gasoline supplies probably fell 750,000 barrels, the survey shows.
Oil stockpiles grew by 7.1 million barrels to 353.4 million in the week ended March 23, the largest increase since July 2010, the Energy Department reported on March 28. Supplies have gained in five of the past six weeks.
The American Petroleum Institute will release separate inventory data today. 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.
Iran will not surrender to international pressure as tightening sanctions restrict the country’s trade in the run-up to the talks over its nuclear program, Foreign Minister Ali Akbar Salehi said in an interview with the official Islamic Republic News Agency published yesterday.
Salehi spoke after U.S. Secretary of State Hillary Clinton said March 31 that negotiations between Iran and the five permanent members of the United Nations Security Council plus Germany are scheduled for April 13 to April 14 in Istanbul.
The cost of importing oil may rise to a record $2 trillion in 2012 for consuming nations if Brent prices remain at about $120 a barrel, the International Energy Agency said yesterday.
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