Bloomberg News

Brent Crude Halts Two-Day Rise on U.S. Inventories Gain

January 09, 2013

Oil switched between gains and losses in London amid signs of rising inventories in the U.S., the world’s biggest crude-consuming nation.

Brent futures were little changed after adding 0.5 percent yesterday. U.S. crude supplies increased 2.4 million barrels last week, according to the American Petroleum Institute. An Energy Department report today may show inventories rose 2 million barrels, a Bloomberg News survey of 11 analysts showed. Gasoline and distillate stockpiles also climbed, the API said.

“Inventories will likely rise in the spring,” said Andy Sommer, a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland, who predicts Brent will remain at about $110 this month. “Supply and demand in the market are pretty much balanced, with a slight deficit, but that is a normal seasonal pattern. We see downside risk once we come into the spring.”

Brent for February settlement on the London-based ICE Futures Europe exchange increased 13 cents to $112.07 a barrel as of 1:06 p.m. local time. The North Sea crude was at a premium of $18.86 to U.S. benchmark, West Texas Intermediate. The spread widened for the first time in four days yesterday to $18.79.

WTI crude for February delivery was at $93.23 a barrel, up 8 cents, in electronic trading on the New York Mercantile Exchange. The contract settled at $93.19 on Jan. 7, the highest since Sept. 18. Prices dropped 7.1 percent last year for the first decline in four years.

RSI Resistance

Oil may fall in New York after failing to settle above technical resistance along its 50-week moving average yesterday, data compiled by Bloomberg show. Sell orders tend to be clustered near resistance levels. On the daily chart, the 14-day relative strength index remains close to 70, a level that would indicate further price gains aren’t sustainable.

U.S. gasoline stockpiles rose 7.9 million barrels in the week ended Jan. 4, the API report showed. Supplies are projected to climb 2.5 million barrels in the Energy Department report, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, increased 5.9 million barrels, compared with a forecast 1.9 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.

‘See Wobbles’

“We’ve got inventory numbers tonight and with a forecast increase that keeps stockpiles at very elevated levels,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “Overall, the markets remain firm. We do see wobbles during the course of the day but it is quite clear that we have a short- to medium-term uptrend in place and that’s consistent with the global industrial growth expectations.”

The Energy Department raised its oil price projections for 2013 and forecast that global consumption will expand to a record. WTI will average $89.54 a barrel, up 1.3 percent from the December estimate of $88.38, it said yesterday in its monthly Short-Term Energy Outlook. The U.S. benchmark averaged $94.12 in 2012, less than the December estimate of $94.26.

U.S. gasoline demand fell last week to the lowest since consumption was tracked in July 2004, said MasterCard Inc. (MA:US) Drivers bought 7.82 million barrels a day of the fuel in the week to Jan. 4, down 3.5 percent from 8.1 million in the prior period, its SpendingPulse report showed yesterday.

Serious Cold

Gasoline at the pump in the U.S. will peak at a lower price this year as production increases and demand declines, according to AAA, the largest U.S. motoring organization. The fuel may reach $3.60 to $3.80 a gallon in 2013, after rising as high as $3.936 last year on April 4, Chief Executive Officer Robert Darbelnet said yesterday. The 2012 average price was a record $3.60, data from the group show.

Gasoil advanced to the highest in five weeks, rising as much as 0.6 percent to $950.50 a metric ton on the ICE exchange.

“Winter is still not showing its face in the U.S. but starting in the middle of next week it is expected that some serious cold will return to continental Europe,” said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland. “Distillate stocks are still relatively low and cold is coming back to Europe at time when some refineries have probably started to cut runs.”

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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


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