Bloomberg News

Oil Rebounds From One-Week Low as U.S. Stockpiles Decline

July 11, 2012

Oil rebounded from the lowest close in more than a week in New York amid signs of a decline in stockpiles in the U.S., the world’s biggest crude consumer.

Futures climbed as much as 1.7 percent after slipping 2.4 percent yesterday. U.S. inventories fell 695,000 barrels last week, the American Petroleum Institute said after yesterday’s settlement. A Department of Energy report today will probably show supplies slid 1.38 million barrels, according to the median estimate in a Bloomberg News survey. China reported passenger- vehicle sales that beat analysts’ forecasts.

“I wouldn’t be surprised to see prices rising, as most of the demand-side risks should be priced in and more risks on the supply side materialize,” said Eugen Weinberg, the Frankfurt- based head of commodities research at Commerzbank AG. “We’re likely to see tightening and lower spare capacities in the second half.”

Oil for August delivery gained as much as $1.40 to $85.31 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.99 at 1:18 p.m. London time. The contract fell $2.08 yesterday to $83.91, the lowest close since July 2. Prices are down 14 percent this year.

Brent crude for August settlement climbed as high as $1.26 cents, or 1.3 percent, to $99.23 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $13.80, from $14.06 yesterday.

Bollinger Band

Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.40 a barrel today, according to data compiled by Bloomberg. Futures rebounded yesterday after trading near that indicator. Buy orders tend to be clustered close to chart-support levels.

U.S. gasoline inventories gained 2.5 million barrels last week, the API figures show. They are projected to rise 500,000 barrels in the government report, according to the survey. Distillate supplies, a category that includes heating oil and diesel, dropped 717,000 barrels compared with a forecast 625,000-barrel increase.

The 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 Department of Energy for its weekly survey.

Refineries ran at 91.8 percent of capacity, the highest for that week since 2006, the API data show. The government report will probably show utilization rates rose 0.2 percent to 92.2 percent, according to the Bloomberg survey.

China Autos

“If the DOE reports similar numbers, they will likely be bullish enough to send WTI higher,” Stephen Schork, president of Schork Group Inc., a consulting firm in Villanova, Pennsylvania, said in an e-mailed report.

A decrease in the Department of Energy’s tally of crude inventories would be the fifth such decline in six weeks. The department plans to release the data at 10:30 a.m. Washington time.

China’s wholesale deliveries of passenger vehicles rose 16 percent to 1.28 million units last month, the China Association of Automobile Manufacturers said in a statement today. That compares with the 1.27 million-unit average estimate of 14 analysts surveyed by Bloomberg.

Crude prices have experienced widening swings over the past month. The 10-day historical volatility for New York oil futures is at 65.13 today compared with 16.3 on June 15. It reached 65.89 on July 3, the highest since May 17, 2011.

Prices slumped yesterday after Norway ended its longest- ever energy strike. Europe’s second-biggest oil and natural-gas exporter warned the industry not to use ultimatums that risk cutting supply. The government announced a plan to resolve the dispute, which started June 24, with compulsory arbitration minutes after a deadline at midnight on July 9 that would have triggered a lockout.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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