Oil traded near the highest level in two weeks in New York, paring an earlier decline, after U.S. voters returned Barack Obama as president of the world’s biggest crude-consuming nation.
Futures were little changed after dropping as much as 1 percent. Oil rallied with gold while the dollar fell after television network projections showed Obama winning re-election and Republican challenger Mitt Romney conceded defeat. Investors speculated the victory increases the chance the U.S. will continue monetary stimulus that tends to weaken the currency and boost dollar-denominated commodities.
“The idea in the market that Obama is more in favor of further monetary intervention than Romney helped lift gold and oil and weaken the U.S. dollar in response to his election,” said Jeremy Friesen, a commodity strategist at Societe Generale SA in Hong Kong.
West Texas Intermediate crude for December delivery was at $88.72 a barrel in electronic trading on the New York Mercantile Exchange, up 1 cent, at 3:42 p.m. Singapore time. The contract earlier dropped as much as 84 cents to $87.87. Prices gained $3.06 yesterday to $88.71, the highest close since Oct. 22. Futures have more than doubled since Obama took office in January 2009 and are down 10 percent this year.
Brent oil for December settlement on the London-based ICE Futures Europe exchange was up 26 cents at $111.33 a barrel. The contract climbed 3.1 percent yesterday. The European benchmark crude was at a premium of $22.63 to New York-traded WTI, from $22.36 yesterday.
The dollar fell 0.4 percent to $1.2863 per euro after earlier gaining as much as 0.2 percent. Gold advanced 0.6 percent to $1,726.57 an ounce.
Obama’s victory also reduces the likelihood that the U.S. will expand oil and gas drilling offshore and on federal land. The president threatened to veto a bill passed by the House of Representatives in July that would have almost doubled the number of oil and gas lease sales through 2015. Romney said he supported increased drilling.
U.S. crude inventories probably rose 2 million barrels to 375 million last week as Hurricane Sandy shut refineries on the East Coast, according to a Bloomberg News survey before an Energy Department report today. Gasoline stockpiles fell by 1.5 million barrels while distillate supplies declined 1.25 million, the median estimate of 11 analysts showed.
“Unless the U.S. economy revives, there’s unlikely to be a big jump in prices,” said Dharmesh Bhatia, an associate vice president at Kotak Commodities Services Ltd. in Mumbai.“Demand needs to go up. Prices may rise to $95 to $96 a barrel during the U.S. winter season, but will fall back again.”
Gasoline demand slid 2.4 percent last week to an eight-month low as the storm disrupted travel and supplies, according to data from MasterCard Inc.
Stockpiles of the motor fuel rose 1.38 million barrels to 201 million last week, the American Petroleum Institute said yesterday. Crude inventories slid 27,000 barrels to 371.7 million, and distillate supplies increased 173,000 barrels to 118.4 million. Crude stockpiles at Cushing, Oklahoma, the delivery point for the New York contract, fell 430,000 barrels to about 43 million, according to the industry group.
The Energy Department is scheduled to release its inventory report at 10:30 a.m. in Washington. The government requires that reports be filed with the agency for its weekly survey. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines.
Twenty-one petroleum tankers will arrive over the next four days in New York Harbor as the region grapples with fuel disruptions following Sandy and a New Jersey refinery said it would be offline as long as three weeks.
Five of the 21 ships are carrying gasoline, five are transporting naphtha, four hold crude and three are fuel oil, Charles Rowe, a spokesman for U.S. Coast Guard in Staten Island, New York, said in a telephone interview yesterday. Phillips 66 said it plans to resume operations at the Bayway refinery in New Jersey in two to three weeks after repairing equipment damaged by Sandy.
The Energy Department yesterday reduced its crude price projection for 2012 on speculation that global production will outpace demand during the fourth quarter. WTI will average $94.51 a barrel this year, down from the October forecast of $95.55, the department’s Energy Information Administration said in its monthly Short-Term Energy Outlook.