Oil Gains on Speculation Biggest Drop Since July Was Exaggerated
Oil rose from the lowest close in a week in New York as investors speculated that the biggest drop in two months was exaggerated.
Futures advanced as much as 0.6 percent after slipping 2.4 percent yesterday, the most since July 23. Prices tumbled more than $3 in less than a minute as October options were about to expire, extending earlier declines after the Federal Reserve Bank of New York’s general economic index, known as the Empire State Index, fell to a three-year low. An Energy Department report tomorrow may show crude stockpiles rose a second week, according to a Bloomberg News survey of analysts.
“The market has said the aggressive fall was ridiculous,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “We’re all thinking that perhaps it was a fat finger by someone, and down it tumbles. The realistic level should be a little bit higher.”
Oil for October delivery gained as much as 61 cents to $97.23 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.93 at 12:28 p.m. Sydney time. The contract slid $2.38 yesterday to $96.62, the lowest close since Sept. 10. Prices are 1.9 percent lower this year.
Brent oil for November settlement rose 31 cents to $114.10 a barrel on the London-based ICE Futures Europe exchange. It dropped 2.5 percent yesterday. The front-month European benchmark grade’s premium to the corresponding West Texas Intermediate contract was at $16.86, down from $16.84 yesterday.
CME Group Inc. suffered from no technical issues as crude oil, gasoline and heating oil dropped on Nymex, said Chris Grams, a spokesman for CME.
The Federal Reserve Bank of New York’s general economic index dropped to minus 10.41, the lowest level since April 2009, from minus 5.85 in August. The median forecast of 53 economists in a Bloomberg survey called for minus 2. Readings less than zero signal contraction for the area of New York, northern New Jersey and southern Connecticut.
U.S. crude inventories probably climbed 1 million barrels last week, according to the median estimate of seven analysts in the Bloomberg survey before the Energy Department report. Gasoline supplies probably rose by 1.5 million barrels, the first gain in eight weeks, according to the survey.
Inventories of distillate fuel, a category that includes diesel and heating oil, probably rose for a sixth week, gaining 1 million barrels, the survey showed.
The American Petroleum Institute will release separate stockpile 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.
Retail gasoline prices climbed above year-earlier levels for the sixth consecutive week, tracking oil futures that rose above $100 a barrel on Sept. 14 for the first time since May.
The national average for regular gasoline climbed 3.1 cents, or 0.8 percent, to $3.878 a gallon from a week earlier, the U.S. Energy Information Administration said in a report posted on its website yesterday. Prices are up 7.7 percent from $3.601 in 2011 and at a record high for this time of year.
To contact the reporter on this story: Ben Sharples in Melbourne at email@example.com
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