Oil Rises for First Time in 3 Days on Likely Supply Drop

Oil advanced, snapping two days of losses in New York on speculation that inventories declined for a third week in the U.S., the world’s biggest crude consumer.

Futures rose as much as 0.9 percent before a government report tomorrow forecast to show that U.S. crude stockpiles fell last week as refiners operated near the highest rates in five years. U.S. retail sales probably expanded last month, the first increase since March, a separate survey showed before a Commerce Department report today. Brent crude rose to more than $115 a barrel yesterday after a U.S. Navy ship collided with an oil tanker in the Persian Gulf.

“The general positive tone in financial markets, plus supply risks and geopolitical tensions, is supporting oil,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt who estimates that crude prices are higher than market conditions justify. “The oil price increase is dangerous because it isn’t driven by demand.”

Oil for September delivery advanced as much as 80 cents to $93.53 a barrel in electronic trading on the New York Mercantile Exchange and traded at $93.37 at 1:37 p.m. in London. It slid 0.2 percent yesterday to $92.73, the lowest close since Aug. 6. Prices are down 5.6 percent this year.

Brent crude for September settlement, which expires Aug. 16, rose 42 cents to $114.02 a barrel on the London-based ICE Futures Europe exchange. The October contract was up 49 cents at $112.21 a barrel. The European benchmark’s premium to West Texas Intermediate was at $20.62 after reaching $21.32 yesterday, the most since April.

U.S. Stockpiles

U.S. crude stockpiles probably fell by 1.75 million barrels last week, according to the median response in a Bloomberg News survey before an Energy Department report tomorrow. The American Petroleum Institute will release separate inventory data today.

The nation’s refiners may have operated their plants last week at 92.3 percent of capacity, down 0.3 percentage points, according to the survey. That’s still up from 89.1 percent a year earlier. Processing rates reached 93 percent in the week ending July 20, the highest in about five years.

Gasoline inventories probably slid 2.13 million barrels, or 1 percent, to 203.9 million in the week ended Aug. 10, the survey showed.

Sales at U.S. retailers probably rose 0.3 percent in July after a 0.5 percent drop in June, easing concern that the world’s biggest economy is faltering, according to the median forecast of 65 economists surveyed by Bloomberg News before the government report today.

“U.S. retail sales will be an interesting figure because it’ll provide an insight into whether the improvement that we saw in employment growth is in fact an indication of improving confidence levels,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

The U.S. Navy said on Aug. 12 that one of its guided- missile destroyers collided with an oil tanker near the Strait of Hormuz in the Persian Gulf.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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