June 30 (Bloomberg) -- Oil dropped for the first time in three days and was headed for a quarterly loss on speculation that market supply conditions didn’t justify recent gains.
Futures in New York dropped as much as 0.7 percent, snapping their biggest two-day rally in seven weeks. Oil rose yesterday after Greece’s parliament backed a package of budget cuts and asset sales, potentially averting the euro zone’s first sovereign default, and the U.S. Energy Department said stockpiles fell more than projected by analysts.
“The price gains of recent days are not justified,” said Carsten Fritsch, a Commerzbank AG analyst in Frankfurt, in a report. “Given the ample supplies available, we envisage a renewed retreat once market enthusiasm regarding Greece has cooled off.”
Crude for August delivery fell as much as 62 cents to $94.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.61 as of 1:11 p.m. London time. The contract climbed yesterday $1.88 to $94.77, completing a two-day rally of 4.6 percent, the biggest since May 10. Futures, down 11 percent since March 31, are headed for their first quarterly decline in a year.
Brent oil for August settlement was down 35 cents a barrel at $112.05. The European benchmark, which has fallen 4.5 percent in the second quarter, traded at a premium of $17.44 to New York-traded West Texas Intermediate. The spread reached a record $22.29 a barrel on June 15.
U.S. crude supplies fell for a fourth week, dropping 4.38 million barrels to 359.5 million last week, according to yesterday’s Energy Department report. That decline was about three times the amount forecast by analysts in a Bloomberg survey, helping to buy New York futures yesterday.
“The reason for the fourth successive decline was lower imports, which more than balanced out weaker refinery utilitization,” Fritsch said. “So there can be no talk yet of demand recovering.”
Crude stockpiles on the U.S. Gulf Coast dropped by 2.4 percent, the most since the first week of January, as imports fell. Supplies being auctioned by the U.S. government under an International Energy Agency initiative will be delivered to that area. Bids to the Strategic Petroleum Reserve were to be submitted by yesterday. The IEA announced its plan to release 60 million barrels of emergency oil stockpiles on June 23. The U.S. is putting up half the total.
Tropical Storm Arlene, the first cyclone of the 2011 Atlantic storm season, made landfall today on the Gulf Coast of Mexico, according to the National Hurricane Center.
--Editors: John Buckley, Raj Rajendran
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