Bloomberg News

Oil Extends Drop as Supply Rises to Highest Level in 21 Years

May 02, 2012

Crude oil futures extended declines after the U.S. Energy Department said stockpiles rose to the highest level in 21 years.

Supplies increased 2.84 million barrels to 375.9 million, the department said today. Inventories were forecast to gain 2.5 million barrels, according to the median of 11 analyst estimates in a Bloomberg survey. Stockpiles at Cushing, Oklahoma, the delivery point for New York futures, gained 1.21 million barrels to a record 43 million.

Crude oil for June delivery fell 83 cents, or 0.8 percent, to $105.33 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Oil traded at $105.54 a barrel before release of the inventory report at 10:30 a.m.

Oil also fell after a report showed U.S. employers added fewer jobs last month than forecast. Employment increased by 119,000 in April following a revised 201,000 gain the prior month, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg called for a 170,000 advance.

“The ADP numbers took the wind out of the sails of the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market needs a steady drumbeat of positive economic news to move higher.”

Unemployment in countries that share the euro rose to the highest level in almost 15 years, and manufacturing contracted for a ninth consecutive month, adding to signs the economy continues to weaken.

Jobless Rate

The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union’s statistics office in Luxembourg said today. That’s the highest level since April 1997, when the rate reached a record at the time of 10.9 percent, according to data Bloomberg has compiled since 1990.

“Concerns about Europe continue to weigh on risk,” Michael Hewson, a London-based analyst at CMC Market, which handles about $240 million a day in U.S. crude contracts, said today in an e-mailed response to questions. “There’s still a lot of uncertainty ahead of this weekend’s political events in France, Greece and Italy. Economic data continue to disappoint in Europe.”

French President Nicolas Sarkozy is trying to retain his office in a runoff election on May 6 against Socialist challenger Francois Hollande. Greece also holds a vote on May 6.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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