Oil Gains a Second Day as U.S. Stockpiles Drop to Five-Month Low

Oil rose for a second day in New York after an industry report showed stockpiles shrank to the lowest in more than five months in the U.S., the world’s biggest crude consumer.

Futures gained as much as 0.9 percent after the American Petroleum Institute said inventories slid 7.2 million barrels last week to 359.3 million, the lowest since the period ended March 23. An Energy Department report today may show supplies fell 4.95 million barrels as Hurricane Isaac curbed Gulf of Mexico output, according to a Bloomberg News survey. Europe’s central bank is set to announce President Mario Draghi’s proposal for bond purchases to tame the region’s debt crisis.

“We’ve been looking to see a persistent trend of firmer commodity use to get those inventories down,” said David Lennox, an analyst at Fat Prophets in Sydney. “If we see stockpiles declining tonight and refineries running above 90 percent capacity, I think that’s going to be a boost for oil. Throw in Draghi and I’d expect the price of crude to go up.”

Crude for October delivery climbed as much as 90 cents to $96.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.11 at 2:25 p.m. Singapore time. The contract increased 6 cents yesterday to close at $95.36. Futures have lost 2.8 percent this year.

Brent oil for October settlement on the London-based ICE Futures Europe exchange advanced as much as 87 cents, or 0.8 percent, to $113.96 a barrel. The European benchmark crude was at a $17.61 premium to New York-traded West Texas Intermediate grade. The spread was $17.73 yesterday, narrowing for the first time in six days.

‘Golden Cross’

Oil may extend gains in New York as futures approach a “golden cross” formation on the daily technical chart, according to data compiled by Bloomberg. The 50-day moving average, at $90.84 a barrel today, has pared a discount to the 100-day mean to 67 cents, the smallest gap since May 24. Investors tend to buy contracts when a shorter-term moving average rises above a longer-term one.

U.S. gasoline stockpiles dropped 2.3 million barrels last week, the API data showed. Supplies are forecast to fall 3 million barrels in the Energy Department report, according to the median estimate of 12 analysts surveyed by Bloomberg News.

Distillate-fuel inventories, a category that includes heating oil and diesel, declined 132,000 barrels, the API said. A median 1.55 million-barrel decrease is projected in the Energy Department report, the survey showed.

About 680,749 barrels a day of oil, or 49 percent of production, were curtailed in the Gulf of Mexico as of 12:30 p.m. East Coast time yesterday, down from 710,866 barrels, the Bureau of Safety and Environmental Enforcement said on its website. About 26 percent of natural-gas output was shut in.

Bond Purchases

Oil extended gains after a report showed Australian unemployment unexpectedly declined. The jobless rate fell to 5.1 percent in August from 5.2 percent in July, the statistics bureau said today. Economists surveyed by Bloomberg forecast a gain to 5.3 percent.

Draghi will announce at a press conference in Frankfurt today whether ECB policy makers have agreed on the bond-purchase proposal. The plan involves unlimited purchases of government debt that will be sterilized by removals elsewhere to assuage concerns about printing money, according to two central-bank officials briefed on the plan.

U.S. Federal Reserve Chairman Ben S. Bernanke said in Jackson Hole, Wyoming, last week he wouldn’t rule out more stimulus to revive growth. Payrolls increased at a slower pace in August and unemployment exceeded 8 percent for a 43rd month, according to economist forecasts before a Labor Department report tomorrow.

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

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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