Monday, April 19, 2010
Crude Oil Climbs From a Three Week Low on Forecast of U.S. Stockpile Drop
Oil rose from a three week low on speculation a report tomorrow will show crude stockpiles in the U.S., the world’s biggest energy consumer, declined for a second week and as rising equity prices buoyed investor sentiment. Inventories in the U.S. probably fell 600,000 barrels last week, a Bloomberg News survey showed. U.S. stocks yesterday reversed losses as Citigroup Inc. beat profit estimates and Bloomberg reported that the Securities and Exchange Commission was divided in its decision to sue Goldman Sachs Group Inc. Asian stocks rose today, led by finance companies.
“The market ran a little hard on the downside,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “Oil has come back quite a bit” and people are reconsidering some of the impact they were expecting from the action against Goldman, he said. Crude oil for May delivery rose as much as 93 cents, or 1.1 percent, to $82.38 a barrel on the New York Mercantile Exchange. It was at $81.96 at 12:13 p.m. Singapore time. Yesterday, the contract dropped 2.2 percent to $81.45, the lowest settlement since March 26. The more actively traded June contract climbed 32 cents to $83.45. Futures have gained 3.3 percent this year.
Oil tumbled yesterday after the SEC sued Goldman, prompting investors to step away from risky assets such as commodities. Air traffic disruptions caused by a volcanic eruption under Iceland’s Eyjafjallajökull glacier cut jet fuel demand in Europe by about two thirds, according to Deutsche Bank.
Oil has fallen in eight of the nine sessions since April 6, when the market reached an 18 month high of $87.06. Prices rose on April 14 after the Energy Department reported an unexpected 2.2 million barrel decline in U.S. crude oil inventories. It was the first drawdown in 11 weeks. Tomorrow’s report will probably show a second decline as refiners increased operating rates for a fifth week to meet summer gasoline demand, according to the Bloomberg survey. Stockpiles of the motor fuel probably rose 140,000 barrels, based on the median estimate from 11 analysts polled.
U.S. oil stockpiles remain high and many commodities have “moved ahead of their fundamentals,” said Moore at Commonwealth Bank of Australia. Brent crude oil for June settlement climbed as much as 57 cents, or 0.7 percent, to $84.80 a barrel on the London based ICE Futures Europe exchange. It was at $84.64 at 12:17 p.m. Singapore time. Yesterday, the contract settled at $84.23 after losing 2.1 percent, the most since Feb. 25.
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