June 2 (Bloomberg) -- Oil declined for a second day in New York after reports showed U.S. crude supplies rose, companies added fewer jobs than forecast and global manufacturing slowed, stoking speculation fuel demand may falter.
Futures fell as much as 1 percent after the biggest drop in three weeks yesterday. Crude stockpiles climbed the most in more than a month, according to the American Petroleum Institute. Employment rose by 38,000 in May, the smallest gain since September, ADP Employer Services said. A 175,000 increase was forecast, according to a Bloomberg News survey. Manufacturing in China, Europe and the U.S. slowed in May.
“The API data was pretty bearish on the crude and gasoline side,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The weak U.S. economic data had a bigger impact since it pushed bond yields higher and the dollar was stronger and that pushed oil lower.”
Crude for July delivery lost as much as $1.04 to $99.25 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.86 at 3:09 p.m. Singapore time. The contract yesterday declined $2.41, or 2.4 percent, to $100.29, the biggest single-session drop since May 11. Prices are up 37 percent the past year.
Brent crude oil for July delivery was at $114.27 a barrel, down 23 cents, on the London-based ICE Futures Europe exchange. The contract yesterday fell $2.20, or 1.9 percent, to $114.53, the lowest settlement since May 24.
The European benchmark contract traded at a premium of $14.36 a barrel to U.S. futures. The difference between front- month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.
The industry-funded American Petroleum Institute said U.S. crude supplies rose 3.5 million barrels last week to 371.6 million. An Energy Department report today is forecast to show stockpiles declined 1.6 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.
Gasoline inventories climbed 1.5 million barrels to 212.7 million, the API said. The Energy Department report may show a 900,000 barrel increase for the fuel, the survey shows.
“The American Petroleum Institute crude inventory data looked negative, with a surprising rise in crude and gasoline stockpiles,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. If Energy Department data “confirms today’s bearish numbers, prices could remain under pressure.”
Oil-supply totals from the API and the Energy Department have moved in the same direction 72 percent of the time over the past year. 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.
Crude imports climbed 29 percent last week to 9.9 million barrels a day, the API report showed. Imports of oil products rose 13 percent to 2.5 million barrels.
“We have been harping for weeks about the seasonally low level of imports and a return to seasonal norms in the Gulf could overshadow the Keystone pipeline’s recent outages,” Stephen Schork, an analyst at Villanova, Pennsylvania-based The Schork Group Inc. said in a report today.
TransCanada Corp. expects to start the 591,000 barrel-a-day Keystone Pipeline in a few days, a company spokesman said yesterday by e-mail. The system was shut on May 29 after a leak at a pump station.
The U.S. Institute for Supply Management’s factory index fell more than projected to 53.5 last month, the lowest level since September 2009, from 60.4 in April, the Tempe, Arizona- based group said yesterday. Economists forecast the gauge would drop to 57.1, according to a Bloomberg News survey.
IntercontinentalExchange Inc.’s Dollar Index, which measures the greenback against the currencies of six trading partners, rose as much as 0.4 percent to 74.89 following the economic reports, after earlier falling as low as 74.7. A stronger dollar typically makes commodities less attractive to investors.
The dollar later weakened against the euro after German Chancellor Angela Merkel said the European Union remains committed to its shared currency and the outlook for German growth is “very positive.”
Separately, a purchasing managers’ index for China yesterday showed the slowest expansionary pace in nine months, while the equivalent measure for the euro area fell to a seven- month low. Russia’s index signaled “near stagnation,” and reports from Poland to Hungary also showed a loss of manufacturing momentum.
The Organization of Petroleum Exporting Countries’ crude production increased for a second straight month in May, led by gains from Saudi Arabia and Nigeria, according to a Bloomberg News survey.
Output rose 165,000 barrels, or 0.6 percent, to average 28.895 million barrels a day, according to the survey of oil companies, producers and analysts. Saudi Arabia bolstered output by 75,000 barrels, or 0.8 percent, to 8.925 million barrels a day, the highest level since October 2008. Nigerian production rose 75,000 barrels a day to 2.06 million last month.
--Editor: Paul Gordon
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