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Crude Futures Drop on Greek Austerity Vote, Rising U.S. Supply

November 07, 2012

Oil fell from a two-week high in New York amid speculation that U.S. crude inventories rose last week and as Greece prepared to vote on austerity measures.

Futures slid as much as 1.6 percent after surging 3.6 percent yesterday. Greek parliamentarians will vote later today on proposed spending cuts amid concern that Europe’s debt crisis may curb demand for fuels. U.S. oil stockpiles probably increased last week for a fourth time in five weeks, an Energy Department report may show today.

“Oil’s drop is reflecting some caution ahead of the Greek vote tonight,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “There is concern that the austerity package will not pass the parliament and Greece will default as a result.”

West Texas Intermediate for December delivery fell as much as $1.41 to $87.30 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.36 at 12:48 p.m. London time. The contract rose $3.06 yesterday to $88.71, the highest close since Oct. 22. Prices have declined 11 percent this year.

Brent for December settlement slid $1.36 to $109.71 a barrel on the ICE Futures Europe exchange. The contract climbed 3.1 percent yesterday. The European benchmark crude was at a premium of $22.47 to New York-traded WTI, compared with $22.36 yesterday.

Greek Prime Minister Antonis Samaras seeks parliamentary approval today for budget cuts to unlock bailout funds amid the third general strike in six weeks.

Greek Vote

The 238 pages of austerity measures, ranging from raising the retirement age two years to 67 to eliminating Christmas and holiday payments for pensioners, will be debated from 10 a.m. with a roll-call vote expected after 8 p.m. Athens time. Approval of the legislation is the first of the parliamentary votes required by Nov. 12 to unlock a 31 billion-euro ($40 billion) portion of international aid.

Oil in New York is declining after reaching technical resistance along its middle Bollinger Band yesterday, according to data compiled by Bloomberg. This indicator is at $89.28 a barrel today. Futures last month reversed a rally after failing to settle above the same band, signaling sell orders may be clustered around it.

U.S. voters returned Barack Obama as president of the world’s biggest crude-consuming nation. Obama’s victory reduces the likelihood that the U.S. will expand oil and gas drilling offshore and on federal land. The president threatened to veto a bill passed by the House of Representatives in July that would have almost doubled the number of oil and gas lease sales through 2015. Romney said he supported increased drilling.

U.S. Inventories

“Unless the U.S. economy revives, there’s unlikely to be a big jump in prices,” said Dharmesh Bhatia, an associate vice president at Kotak Commodities Services Ltd. in Mumbai. “Demand needs to go up. Prices may rise to $95 to $96 a barrel during the U.S. winter season, but will fall back again.”

U.S. crude inventories probably rose 2 million barrels to 375 million last week as Hurricane Sandy shut refineries on the East Coast, according to a Bloomberg News survey before an Energy Department report today. Gasoline stockpiles fell by 1.5 million barrels. Supplies of distillates, a category that includes diesel and heating oil, declined 1.25 million, the median estimate of 11 analysts showed.

Gasoline demand slid 2.4 percent last week to an eight- month low as the storm disrupted travel and supplies, MasterCard Inc. said in a report yesterday.

Stockpiles of the motor fuel rose 1.38 million barrels to 201 million last week, the American Petroleum Institute said yesterday. Crude inventories slid 27,000 barrels to 371.7 million, and distillate supplies increased 173,000 barrels to 118.4 million. Crude stockpiles at Cushing, Oklahoma, the delivery point for the New York contract, fell 430,000 barrels to about 43 million, according to the industry group.

The Energy Department is scheduled to release its inventory report at 10:30 a.m. in Washington. The government requires that reports be filed with the agency for its weekly survey. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines.

To contact the reporter on this story: Ayesha Daya in Dubai at

To contact the editor responsible for this story: Stephen Voss at

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