Oil Trades Below $90 a Barrel a Third Day on Supply Gain
Oil fell for the third time in four days in New York on speculation an increase in U.S. crude stockpiles signaled slowing demand in the world’s biggest consumer of the commodity.
Futures slid as much as 0.8 percent after the industry- funded American Petroleum Institute said inventories rose 1.35 million barrels last week. An Energy Department report today may show supplies dropped 1 million barrels, according to a Bloomberg News survey. The International Monetary Fund said China’s slowing economy faces significant downside risks and relies too much on investment.
“Given the background of reduced confidence, rising inventories can be a reflection of sluggish demand,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “What’s happening in China is a key component for people’s demand outlook for oil.”
Crude for September delivery decreased as much as 69 cents to $87.85 a barrel in electronic trading on the New York Mercantile Exchange. It was at $87.83 at 2:50 p.m. Singapore time. The contract yesterday climbed 0.4 percent to $88.50, the highest since July 20. Prices are down 11 percent this year.
Brent oil for September settlement on the London-based ICE Futures Europe exchange fell as much as 65 cents, or 0.6 percent, to $102.77 a barrel. The European benchmark crude was at a $15.03 premium to the New York-traded West Texas Intermediate grade, from $14.92 yesterday.
Oil in New York has technical support at $86.25 a barrel, along the lower of two so-called leading span lines that define an “ichimoku cloud” on the daily chart, according to data compiled by Bloomberg. The cloud is an area where buy orders tend to be clustered. Last week’s price increase stalled near the upper boundary, signaling chart resistance.
U.S. gasoline inventories increased 2.35 million barrels last week, according to the API. The Energy Department report today may show supplies shrank 1 million barrels, according to the median estimate of 11 analysts surveyed by Bloomberg.
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 Department of Energy for its weekly survey.
“Yesterday’s API data was bearish,” Stephen Schork, president of The Schork Group Inc. in Villanova, Pennsylvania, said in a note. “If the DOE publishes a similar report we doubt the bulls will get another run at $90 this week.”
U.S. fuel consumption last week was 4.4 percent below the year-earlier level, MasterCard Inc. (MA) said in its SpendingPulse report yesterday. That’s the 47th straight drop in the measure. Year-to-date gasoline demand is 4.6 percent below 2011.
China sees “obvious” signs of stabilization in its industrial output growth and the fundamentals are still sound, Zhu Hongren, a spokesman for the Ministry of Industry and Information Technology, said at a briefing in Beijing today.
The nation’s economy is bottoming out now and probably to have a “slight improvement” this quarter, Markus Rodlauer, head of the IMF’s China team, said in a Bloomberg Television interview. In a separate statement, the Washington-based lender urged China’s leaders to boost consumption and channel citizens’ savings away from housing.
Goldman Sachs Group Inc. reiterated its recommendation to buy September WTI futures, citing a “tightening balance” in physical oil markets amid sanctions on Iran. The call, first made in February, has so far returned a loss of $19.41 a barrel, the bank said in a report e-mailed today.
Iranian and European Union officials met yesterday to prepare for another possible round of talks on the nuclear program that has prompted the sanctions against the second- biggest crude producer in the Organization of Petroleum Exporting Countries.
The meeting in Istanbul was between Helga Schmid, deputy head of the EU’s foreign relations arm, and Ali Bagheri, the Iranian deputy negotiator on the nuclear issue. It will be followed by contact between EU foreign policy chief Catherine Ashton and Saeed Jalili, Iran’s chief negotiator, Ashton’s office said, without giving details of the talks.
The U.S. and its allies have raised concern that Iran is concealing a nuclear-weapons program, a charge the Persian Gulf nation rejects. The EU on July 1 imposed an oil embargo against the country, while the U.S. has implemented financial and trade sanctions. Iran produced 3.2 million barrels a day of crude in June, according to estimates compiled by Bloomberg. Saudi Arabia had output of 9.8 million a day.
To contact the editor responsible for this story: Alexander Kwiatkowski at email@example.com