Bloomberg News

Oil Near Three-Month High as U.S. Crude Stockpiles Drop

August 22, 2012

Oil in New York traded near a three- month high after a report showed stockpiles fell to the lowest level since March in the U.S., the world’s biggest crude user.

October futures were little changed after climbing 0.6 percent yesterday on speculation European leaders will make progress in resolving the region’s debt crisis. Crude inventories dropped by 6 million barrels last week to 361 million, the industry-funded American Petroleum Institute said. An Energy Department report today may show supplies slid by 250,000 barrels, according to a Bloomberg News survey.

“The Department of Energy data will be important,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “The level of optimism in Europe may provide some support.”

Crude for October delivery was at $96.87 a barrel in electronic trading on the New York Mercantile Exchange, up 3 cents at 2:50 p.m. Singapore time. The September contract, which expired yesterday, rose 71 cents to $96.68, the highest close since May 10. Front-month prices are 2 percent lower this year.

Brent oil for October settlement on the London-based ICE Futures Europe exchange was at $114.60 a barrel, down 4 cents. The European benchmark crude was at a $17.73 premium to New York-traded West Texas Intermediate grade, from $17.80 yesterday.

Fuel Supplies

Oil’s rally in New York may stall as a technical indicator shows futures have risen too quickly for further gains to be sustained, according to data compiled by Bloomberg. The 14-day relative strength index is near 70, the highest reading since February. Crude also has chart resistance along its 200-day moving average around $96.74 a barrel today. The front-month contract yesterday traded higher than this indicator without settling above it.

U.S. gasoline inventories climbed 869,000 barrels last week, according to the API. The Energy Department report may show supplies slipped 1.4 million barrels, according to the Bloomberg survey. Distillate stockpiles, a category that includes heating oil and diesel, fell 1 million barrels in the API report compared with a forecast 1 million-barrel gain in the survey.

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 Energy Department for its weekly survey.

Europe Meetings

Luxembourg Prime Minister Jean-Claude Juncker, head of the group of euro-area finance ministers, visits Athens today to listen to a request by Greece’s Prime Minister, Antonis Samaras, for a two-year extension to the country’s fiscal-adjustment program. French President Francois Hollande and German Chancellor Angela Merkel meet in Berlin tomorrow. Concessions are possible for Greece if it shows a willingness to meet the main targets in its bailout, Norbert Barthle, a senior lawmaker with Merkel’s government, said yesterday.

Tropical Storm Isaac, the ninth named storm of the Atlantic hurricane season, was forecast to strengthen into a hurricane tomorrow as it headed toward the Leeward Islands in the Caribbean Sea, according to the U.S. National Hurricane Center. Isaac was moving west at 18 miles (29 kilometers) per hour about 345 miles east of Guadeloupe, the Miami-based center said in an advisory at 2 a.m. Atlantic time. The system packed maximum sustained winds of 40 mph, below the minimum 74 mph speed of a Category 1 hurricane.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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