Oil Trades Near One-Month Low as Fuel Stockpiles Seen Rising

Oil traded near the lowest close in almost a month in New York on speculation that an Energy Department report will show fuel stockpiles climbed in the U.S., the world’s biggest crude consumer.

Futures were little changed after dropping for a fifth day yesterday, the longest losing streak since October. Distillate supplies, including diesel and heating oil, are projected to rise a second week while gasoline inventories may reach the highest level since April, according to a Bloomberg News survey before the government report tomorrow. The Organization of Petroleum Exporting Countries is gathering in Vienna to determine the group’s targets for crude production.

“Crude is starting to feel the weight of softer demand given lower refining activity expected in the first quarter,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm. “The market needs a clear statement or action from the Saudis that they will cut production to the already agreed upon quota.”

West Texas Intermediate crude for January delivery was at $85.74 a barrel in electronic trading on the New York Mercantile Exchange, up 18 cents, at 8:47 a.m. London time. The contract slid 37 cents to $85.56 yesterday, the lowest close since Nov. 15. Prices have fallen 13 percent this year and are headed for the first annual decrease since 2008.

Brent for January settlement on the London-based ICE Futures Europe exchange was at $107.67 a barrel, up 34 cents. The European benchmark crude was little changed at a premium of $21.97 to WTI, near the widest in a week.

Fuel Supplies

Oil may extend its decline in New York after settling below an upward-sloping trend line on the daily chart yesterday, according to data compiled by Bloomberg. Losses tend to accelerate when technical-support levels are breached. This line, connecting the intraday lows of June and November, is around $85.66 a barrel today.

U.S. distillate inventories probably increased 1.5 million barrels in the week ended Dec. 7, according to the median estimate of seven analysts surveyed by Bloomberg before tomorrow’s Energy Department report. Gasoline supplies may have gained 2 million barrels to 214.1 million. Crude stockpiles are expected to have shrunk 2.5 million barrels as refineries boosted fuel production, the survey showed.

The American Petroleum Institute in Washington will release separate inventory data today. The industry group 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.

OPEC Quota

OPEC, which supplies about 40 percent of the world’s crude, is expected to maintain its output quota at 30 million barrels a day at its meeting tomorrow, according to a Bloomberg survey of 18 analysts published last week. The group will release its monthly oil market report at about midday today.

“My expectations are for oil to hold” at about $85 a barrel, said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “We may see some rhetoric come out of OPEC that will support prices, but I don’t think they will change the quota.”

Saudi Arabia and other Gulf nations increased output this year to replace volumes lost from Iran, whose exports have been curbed by U.S. and European Union sanctions, relegating it from the rank of OPEC’s second-largest producer.

The 12-member group last month estimated demand for its crude at 29.72 million barrels a day in 2013, an assessment reaffirmed yesterday by a subcommittee in Vienna. The International Energy Agency in Paris on Nov. 13 predicted the so-called “call on OPEC” at 29.8 million barrels.

OPEC may temporarily extend the role of Secretary General Abdalla El-Badri as talks on a successor remain in deadlock, according to two people familiar with the matter. The meeting is scheduled to select a replacement for the Libyan, whose second three-year term ends Dec. 31.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

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

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