Aug. 31 (Bloomberg) -- Oil fell, headed for its biggest monthly drop since May in New York, as signs of swelling inventories and faltering demand countered speculation the U.S. will take further steps to bolster its economy.
New York futures declined as much as 1.4 percent, snapping four days of gains, after the American Petroleum Institute said crude supplies rose 5.13 million barrels last week, the biggest increase since March. An Energy Department report today may say inventories fell 500,000 barrels, according to the median estimate in a Bloomberg News survey.
“With the slowdown in economic growth and higher probability of recession, prices are probably a bit too high,” said Eliane Tanner, an analyst at Bank Sarasin & Cie AG in Zurich, who predicts Brent will move toward $95 a barrel by the end of the year. “I don’t see much further upside.”
Crude for October delivery on the New York Mercantile Exchange dropped as much as $1.23 to $87.67 a barrel and was at $88.11 at 1:41 p.m. London time. The contract yesterday advanced $1.63 to $88.90. Prices are down 7.9 percent this month and 3.6 percent this year.
Brent oil for October settlement was down 8 cents, or 0.1 percent, at $113.94 on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $25.77 to U.S. West Texas Intermediate futures, compared with a record close of $26.21 on Aug. 19. Brent is down 2.4 percent this month.
Crude oil supplies rose to 352 million barrels, the industry-funded American Petroleum Institute report showed. They are about 3.8 percent above the 5-year average, according to Bloomberg data. Analysts were split before today’s Energy Department report, with seven respondents in a Bloomberg survey forecasting a drop in stockpiles and six expecting an increase.
“Bearishness today was mainly because of the API data,” said Ken Hasegawa, a commodity-derivatives sales manager at broker Newedge Group in Tokyo, who predicts that crude oil may rise to $90 a barrel by the end of this week after breaching a technical resistance level at $89 a barrel. “Demand for gasoline was not so bullish.”
Gasoline inventories declined 3.11 million barrels to 210.8 million last week, according to the API. The Energy Department report may show they fell 950,000 barrels, the median of 14 analyst estimates showed.
Oil-supply totals from the API and the department have moved in the same direction 71 percent of the time in the past year. The API collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for its weekly survey.
Gasoline extended gains after rising last week as Hurricane Irene threatened refineries on the U.S. East Coast.
Tropical Storm Katia strengthened in the Atlantic and may be declared a hurricane today, the U.S. National Hurricane Center said. Katia, about 985 miles (1,585 kilometers) from the southern Cape Verde Islands, has winds of 65 miles per hour and is speeding west-northwest at 21 mph, the NHC said in an advisory at 5 a.m. New York time.
“The threat of Hurricane Irene has passed, but the U.S. hurricane season is far from over and September is the peak month of hurricane activity,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. The bank estimates oil in New York will average $100 a barrel in the third quarter.
Gasoline for September delivery gained 1 percent to $3.0245 a gallon today on the New York Mercantile Exchange. It rose 8.94 cents, or 3.1 percent, to $2.9958 yesterday. Prices also increased after Sunoco Inc. shut a gasoline-making unit at its Philadelphia refinery. The motor fuel is set for a monthly drop of 3.6 percent.
Oil slid this month amid signs developed economies are weakening. U.S. consumer confidence tumbled to the lowest level since April 2009 and European confidence fell the most since December 2008 in reports for August yesterday from the Conference Board in New York and the European Commission.
--With assistance from Christian Schmollinger and Ann Koh in Singapore. Editors: John Buckley, Rachel Graham
To contact the reporter on this story: Ben Sharples in Melbourne at firstname.lastname@example.org
To contact the editor responsible for this story: Alexander Kwiatkowski at email@example.com