Crude Oil Futures Tumble as Demand Outlook Dims, China Manufacturing Slows

Crude oil fell for a second day on signals that economic growth in the U.S. and China, the world’s biggest energy consuming countries, is slowing. Oil slipped as much as 2.9 percent after China’s industrial output grew by the least in 11 months and the Federal Reserve said the U.S. recovery is decelerating. Futures extended declines after the U.S. Energy Department reported that fuel supplies climbed last week.

“The Chinese economy is showing signs of weakness and the picture here is worsening,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The economic picture isn’t rosy. The question now is where we will find support as we move south.” Crude oil for September delivery fell $2.10, or 2.6 percent, to $78.15 a barrel at 11:39 a.m. on the New York Mercantile Exchange. Futures touched $77.90, the lowest level since July 30. Brent crude oil for September settlement slipped $1.93, or 2.4 percent, to $77.67 a barrel on the London based ICE Futures Europe Exchange.

China’s year-on-year industrial production growth slowed to 13.4 percent in July, the statistics bureau said in Beijing today. In June, the increase was 13.7 percent. July’s gain was the smallest since August last year after excluding distortions caused by holidays at the start of each year. “The markets are once again responding to negative economic news from China,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “Chinese industrial output isn’t growing as fast and the retail sales numbers were disappointing”.....Read the entire article.

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Crude Oil and Gasoline Futures Decline on Speculation U.S. Fuel Supplies Will Climb

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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Crude Oil Drops as Report Shows U.S. Supplies Gained More Than Predicted

Crude oil fell after a government report showed a bigger than forecast increase in U.S. supplies and as the dollar surged to a 10 month high against the euro. Stockpiles rose 7.25 million barrels to 351.3 million last week, the Energy Department said. Inventories were forecast to climb 1.65 million barrels, according to a Bloomberg News survey. The greenback increased after Fitch Ratings cut Portugal’s credit grade. A stronger dollar reduces the appeal of commodities as an alternative investment.

“The crude number was a lot bigger than what was expected,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “There hasn’t been much attention paid to the fundamentals lately. The market has been more focused on what happens to the dollar and equities.” Crude oil for May delivery dropped $1.04, or 1.3 percent, to $80.87 a barrel at 11:01 a.m. on the New York Mercantile Exchange. Futures have increased 1.9 percent in 2010 and 50 percent from a year earlier.

Imports of crude oil gained 12 percent to 9.4 million barrels a day last week, the highest level since September and the biggest change since August, the report showed. Gasoline stockpiles fell 2.72 million barrels to 224.6 million in the week ended March 19. A 1.5-million-barrel drop was forecast, according to the median of 16 analyst responses in the Bloomberg News survey. Inventories of distillate fuel, a category that includes heating oil and diesel, declined 2.42 million barrels to 145.7 million, according to the department. A decrease of 985,000 barrels was forecast.....Read the entire article.

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Crude Oil Falls From 7 Week High as Dollar's Gain Reduces Appeal of Commodities

Crude oil fell as the dollar climbed the most against the euro in two weeks, reducing the appeal of commodities as an alternative investment. Oil slipped as much as 1.4 percent on the greenback’s advance after European Central Bank President Jean-Claude Trichet kept its benchmark interest rate unchanged and extended some stimulus measures to cement the economic recovery. Prices also dropped as a report showed that the number of contracts to buy previously owned homes in the U.S. declined in January.

“The dollar has been gaining strength, which is having an impact on the energy markets,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “We had some bad home sales data, which seems to also be sending prices lower.” Crude oil for April delivery fell 74 cents, or 0.9 percent, to $80.13 a barrel at 10:30 a.m. on the New York Mercantile Exchange. The contract rose 1.5 percent to $80.87 yesterday, the highest settlement level since Jan. 11.

Brent crude oil for April delivery declined 83 cents, or 1.1 percent, to $78.42 a barrel on the London-based ICE Futures Europe exchange. The dollar traded at $1.3595 per euro, up 0.8 percent from $1.3697 yesterday. The greenback is heading for the biggest gain since Feb. 17. An index of home purchase agreements, or pending home sales, fell 7.6 percent after a revised 0.8 percent increase in December, the National Association of Realtors announced today in Washington.....Read the entire article.


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Oil Trades at $74 on China Economic Tightening, Saudi Concern

Oil was little changed at $74 a barrel after China sought to temper its economic expansion and a Saudi adviser said the U.S. aims to cut oil imports. China, the world’s second largest oil consuming country, ordered banks to set aside more deposits as reserves for the second time in a month on Feb. 12, signaling slower economic growth and reduced energy demand. Saudi oil ministry adviser Mohammad al-Sabban said today the U.S. is promoting nuclear power as a means of cutting oil imports.

“The market is a bit uneasy about the Chinese tightening,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. China is not “yet the largest importer; it’s not yet the largest consumer region. Still, it is one of the most important ones.” Crude oil for March delivery traded at $74 a barrel, down 13 cents, at the halt of electronic trading for the contract on the New York Mercantile Exchange at 1:15 p.m. Trading resumes at 6 p.m. New York time. There is no floor trading today because of the U.S. Presidents’ Day holiday.

The dollar advanced to $1.3601 against the euro, from $1.3632, as of 3:15 p.m. in New York. The Dollar Index, a six- currency gauge of the greenback’s value, rose 0.14 percent to 80.366. A rise in the value of the dollar curbs demand for commodities as an alternative investment. “What we would be looking for in the next week is how the U.S. dollar is going to behave,” said Harry Tchilinguirian, head of commodity derivatives research at BNP Paribas SA in London. “You are going to be looking at how the dollar is going to behave against a number of currency pairs”....Read the entire article.


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Crude Oil Futures Fluctuate in New York After U.S. Unemployment Rate Drops

Crude oil fluctuated after a government report showed the U.S. unexpectedly lost jobs last month while the unemployment rate declined.

Oil rose as much as 1.1 percent and slipped 0.9 percent after the Labor Department report was released in Washington. Employment fell by 20,000 in January as the jobless rate dropped to 9.7 percent, the lowest level since August. Prices plunged 5 percent yesterday, the biggest decrease since July 29.

“There’s a lot of uncertainty about how to interpret the payroll data,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “After yesterday’s big drop the market looks shaky, and it will be hard to maintain any moves higher.”

Crude oil for March delivery declined 8 cents to $73.06 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Futures were little changed this week and are up 77 percent from a year ago.

The Standard & Poor’s 500 Index rose 0.1 percent to 1,064.35. The dollar climbed 0.3 percent versus the euro to $1.3677, from $1.3723 yesterday.

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Crude Oil Drops a Second Day on U.S. Inventory Gains, Stronger Dollar

Crude oil declined for a second day after a U.S. government report yesterday showed a bigger than forecast increase in inventories, while a stronger dollar dulled the appeal of commodities. The Energy Department reported that crude stockpiles rose by 2.32 million barrels last week, compared with an expected 400,000 barrel gain, as refineries operated at their lowest rate outside of a hurricane period since 1989. Supplies of distillate fuels such as heating oil declined less than forecast.

“Strong contraction in distillate demand, which belies the recovery in the U.S. suggested by the latest GDP and manufacturing data, is weighing on sentiment,” said Harry Tchilinguirian, head of commodity derivatives research at BNP Paribas SA in London. “It will be the second half of the year before oil breaks its range centered around $75 and sustainably rallies.” Crude oil for March delivery fell as much as 88 cents, or 1.1 percent, to $76.10 a barrel in electronic trading on the New York Mercantile Exchange. It was at $76.35 at 1:21 a.m. London time. Futures, which gained 78 percent in 2009, are down 3 percent so far this year.

Crude declined in tandem with European stock indexes. The Dow Jones Stoxx 600 Index slipped 0.9 percent to 247.21 as of 1:22 p.m. in London, erasing an earlier gain of 0.3 percent, led by losses among companies in Greece, Portugal and Spain.....Read the entire article.

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Crude Oil Falls to a Five Week Low in New York as Gasoline Supplies Rise

Crude oil and gasoline fell to five week lows after a U.S. government report showed inventories of the motor fuel rose to a 22 month high. Oil dropped as much as 2.8 percent after the Energy Department said that gasoline supplies climbed 1.99 million barrels to 229.4 million last week, the highest level since March 2008. Oil stockpiles tumbled amid expectations that they would increase.

“The crude number was certainly supportive for prices, but the product numbers were negative,” said Tom Bentz, senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “We headed for some new lows and the selling dried up.” Crude oil for March delivery fell $1.45, or 1.9 percent, to $73.26 a barrel at 1:38 p.m. on the New York Mercantile Exchange. Oil touched $72.65, the lowest level since Dec. 21.

Oil supplies dropped 3.89 million barrels, or 1.2 percent, to 326.7 million, the department said. They were forecast to rise 1.5 million barrels in the Bloomberg survey, according to the median estimate of 19 analysts in a Bloomberg News survey. Gasoline stockpiles were estimated to increase 900,000 barrels.

“The only bullish number in today’s report was crude oil, and that was apparently due to the closure of the Houston Ship Channel,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. The Houston Ship Channel, which serves the largest U.S. petroleum port, reopened Jan. 21 after shutting two days earlier because of fog.....Read the entire article.


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Crude Oil Drops for a Fourth Day, Trades Below $75 as Dollar Strengthens

Crude oil dropped for a fourth day, trading below $75 a barrel as the dollar gained amid speculation the U.S. Federal Reserve will start raising interest rates. Oil closed at its lowest level since Oct. 14 last week after a better than forecast U.S. jobless report bolstered the dollar. Commodities including gold and oil typically weaken when the dollar appreciates. Traders have raised their expectations that the Fed will lift interest rates early next year.

“We’re seeing continued follow-through from the jobs data, fueling talk that the Federal Reserve may need to consider raising interest rates, strengthening the dollar,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Crude oil for January delivery fell $1.02, or 1.4 percent, to $74.45 a barrel at 10:55 a.m. on the New York Mercantile Exchange, marking the first four day decline since August. Prices have climbed 67 percent this year.

The dollar increased to $1.4827 per euro from $1.4858 in New York at the end of last week. The dollar weakened this year as the Federal Reserve kept benchmark interest rates near zero since December 2008 to revive lending after the worst financial crisis since World War II.....Read the entire article.

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Crude Oil Rises as U.S. Business Activity Gains a Second Month

Crude oil rose after a report showed that U.S. business activity gained for a second month, bolstering optimism that the economic recovery in the world’s biggest energy consuming country will accelerate. Oil rebounded after the Institute for Supply Management Chicago Inc. said today its business barometer increased to 56.1, the highest level since August 2008. Readings above 50 signal expansion. Prices dropped earlier as Dubai’s government said it hasn’t guaranteed the debt of Dubai World, a state controlled company struggling with $59 billion in liabilities.

“These are very good numbers,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas based energy consultant. “Any number above 50 points to an expanding U.S. economy and that’s very good for oil demand.” Crude oil for January delivery increased 37 cents, or 0.5 percent, to $76.42 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Futures are up 71 percent this year. Economists projected the Chicago index would drop to 53, based on the median of 53 estimates in a Bloomberg News survey.

Oil in New York declined 2.5 percent on Nov. 27 as Dubai World’s attempt to reschedule its debt bolstered the dollar. “The dollar is weakening again, which is giving oil support,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “Any big dip in prices is being seen as an opportunity to get into the market”.....Read the entire article.

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Oil Rises the Most in Six Weeks on Weaker Dollar, Equity Gain

Crude oil rose the most in six weeks as the dollar weakened and the Standard & Poor’s 500 Index strengthened to a 13 month high, bolstering confidence that the global economy and energy demand are recovering. Oil gained 3.3 percent as the U.S. currency’s drop encouraged the purchase of alternative investments. Stocks climbed after U.S. retail sales increased more than forecast and Asian government leaders pledged to maintain economic stimulus spending. The gross domestic product of Japan, the third biggest oil consumer, grew at a 4.8 percent pace in the third quarter.

“The dollar is weaker and stocks are up, both of which are helping send prices higher,” said Ric Navy, a broker at BNP Paribas SA in New York. “The funds are still coming in, and that should push the market higher.” Crude oil for December delivery rose $2.55 to settle at $78.90 a barrel on the New York Mercantile Exchange. It was the biggest gain since Sept. 30. Oil has traded between $74.79 and $82 since Oct. 15. Futures are up 77 percent this year.....Read the entire article.

Crude Oil Fluctuates Amid Equity Gain, Ample U.S. Supplies

Crude oil fluctuated as equity gains indicated that the U.S. is pulling out of a recession amid ample fuel supplies in the world’s biggest energy using country. Oil is heading for a 4.6 percent increase this week, a second straight weekly advance, as the stock market climbed on data showing an expansion in U.S. housing starts and industrial capacity utilization.

The country’s supplies of crude oil, gasoline and distillate fuel are higher than average, according to the Energy Department. “This is a range bound market,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “There’s nothing at this moment that is giving it a direction”.....Read the entire article