Crude oil fell and gasoline declined for a fourth day on speculation that U.S. stockpiles of the fuel will surge as refineries bolster processing rates. U.S. plants operated at 84.5 percent of capacity last week, the highest level since October, according to an Energy Department report on April 7. Futures climbed earlier today on signals that Greece, Europe’s most indebted nation, will get an international bailout to avert a default.
“We’re still in corrective mode,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “Gasoline has been under pressure ever since the inventory report showed the increase in refinery runs.” Crude oil for May delivery declined 64 cents, or 0.8 percent, to $84.75 a barrel at 12:07 p.m. on the New York Mercantile Exchange. Prices climbed as much as 98 cents, or 1.1 percent, earlier today. Oil has dropped 0.1 percent this week and increased 6.8 percent this year.
Gasoline for May delivery slipped 1.78 cents, or 0.8 percent, to $2.2805 a gallon in New York. Oil surged to an 18 month intraday high of $87.09 on April 6 following reports that showed growth in U.S. jobs and service industries. “Prices moved higher on expectations that economic growth will continue and demand is going to increase,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Inventory levels are still robust. If demand doesn’t pick up, oil is going to drop.”
U.S. Stockpiles
The U.S. Energy Department reported on April 7 that supplies of crude oil rose 1.98 million barrels to 356.2 million last week, leaving stockpiles 7.1 percent higher than the five year average for the period. It was the 10th consecutive gain, the longest stretch of weekly increases since late 2004.
“There’s no shortage of supply, and demand isn’t that strong,” said Paul M. Mecray III, a managing director at Tower Bridge Advisors, an investment adviser in West Conshohocken, Pennsylvania. “There are geopolitical concerns that are supporting prices. If Iran were to be attacked, oil would rise well over $100 in minutes.”
President Barack Obama vowed to maintain “consistent and steady” international pressure against Iran developing nuclear weapons capabilities. “I don’t think you’ve seen the degree of international unity that you’ve seen in this effort,” Obama said on ABC’s “Good Morning America” program, taped yesterday in Prague.
The U.S. is pushing for tougher measures in a fourth set of sanctions against Iran at the United Nations to stop what it says is an Iranian development program for a nuclear arms capability that would destabilize the Middle East. Brent crude oil for May settlement fell 38 cents, or 0.5 percent, to $84.43 a barrel on the London based ICE Futures Europe exchange.
Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net
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