Oil Slips a Second Day in New York on U.S. Jobless Claims

Oil dropped for a second day, erasing most of its weekly gain in London, after U.S. Federal Reserve officials signaled the winding down of a stimulus program this year in the world’s biggest crude user.

Brent crude dropped as much as 1.6 percent, trimming its weekly increase to 0.4 percent. Futures pared some of today’s loss after data showed payrolls increased by 155,000 workers in the U.S. last month, compared with an estimated 152,000. The unemployment rate held at 7.8 percent. Members of the Federal Open Market Committee said they will probably end their $85 billion monthly bond purchases sometime in 2013, according to minutes of its latest meeting released yesterday.

“The U.S. is at a dangerous point where it could declare victory too early,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd., who predicts Brent will trade from $100 to $125 this quarter. “The risks to growth estimates in the U.S. in the second half are quite high. Removal of monetary stimulus combined with a fiscal tightening could be disastrous.”

Brent for February settlement slid as much as $1.76 to $110.38 a barrel on the London-based ICE Futures Europe exchange. It traded for $111.02 at 1:38 p.m. local time.

West Texas Intermediate for February delivery fell as much as $1.40 to $91.52 a barrel on the New York Mercantile Exchange. The graded has added 1.4 percent this week. Brent was $18.82 more than WTI, compared with $19.27 yesterday.

Doji Candlestick

Loading programs for North Sea Oseberg crude will probably be released today, followed by Brent, Ekofisk and Forties on Jan. 7, according to two people with knowledge of the schedules who asked not to be identified because the information is confidential.

WTI is declining as a technical formation signals buying interest is waning after a rally at the start of this week, according to data compiled by Bloomberg. Futures yesterday closed 1 cent a barrel above the opening price, creating a cross-shaped candlestick known as a “doji.” Prices changed direction after a similar pattern on Dec. 24. Crude has chart support along its 200-day moving average, around $91.76 today.

The Federal Reserve committee members were split on how long the bond purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date, according to the record of the FOMC’s Dec. 11 to Dec. 12 gathering released yesterday in Washington.

Reduce Stimulus

Payrolls rose by 155,000 workers last month following a revised 161,000 advance in November that was more than initially estimated, Labor Department figures showed today in Washington. The median estimate of 82 economists surveyed by Bloomberg called for an increase of 152,000. The unemployment rate held at 7.8 percent, matching the lowest since December 2008.

“The FOMC minutes made it clearer that the path to reduce stimulus is there,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. Some investors “have used this as an excuse to sell oil overnight,” he said.

The industry-funded American Petroleum Institute yesterday reported U.S. crude inventories dropped 12 million barrels last week to 358.5 million. The Energy Department is scheduled to release its weekly report at 11 a.m. in Washington today, two days later than usual, and 30 minutes after its regular time, because of the New Year holiday.

The government report may show stockpiles fell by 1 million barrels to 370.1 million in the seven days ended Dec. 28, according to the median of 10 analyst estimates. That would be a third weekly decline and the sixth drop in seven weeks.

Seaway Pipeline

Enterprise Products Partners LP and Enbridge Inc. plan to resume service on the 500-mile (805-kilometer) Seaway pipeline at full rates next week after more than doubling capacity.

Seaway, which runs from Cushing, Oklahoma, to Freeport, Texas, may reduce a glut in the U.S. Midwest and shrink imports to the Gulf Coast, home to about half of the country’s refining facilities. Supplies at Cushing, the delivery point for WTI futures, rose to a record 49.2 million barrels on Dec. 21, Energy Department data show.

Prices may rise next week on speculation that stronger economic growth will boost fuel demand, a Bloomberg survey showed. Fourteen of 24 analysts and traders, or 58 percent, forecast an increase through Jan. 11. Five respondents, or 21 percent, predicted a drop. Five said it would be little changed.

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