Oil dropped from the highest close in more than a week in New York as investors bet that rising U.S. stockpiles signal fuel demand may falter in the world’s biggest crude-consuming nation.
Futures slipped as much as 0.6 percent, declining for the first day in four. Crude supplies rose 3.6 million barrels last week, data from the American Petroleum Institute showed. A government report today may show inventories gained 2.6 million barrels, according to a Bloomberg News survey. Prices also slid after the U.S. said it’s considering releasing oil from its Strategic Petroleum Reserve. U.S. gasoline demand declined 1.5 percent last week, according toMasterCard Inc. (MA)
“We’re at that level where we will need fresh impetus in terms of ongoing improvement in the demand outlook to take us above here,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who sees technical resistance for West Texas crude at $108 a barrel. Inventory data ’’provides some insight into the state of the supply, demand balance in the U.S., particularly as we approach the driving season.’’
Oil for May delivery fell as much as 59 cents to $106.74 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.88 at 12:05 p.m. Sydney time. It gained 30 cents yesterday to $107.33, the highest close since March 19. Prices are 8.2 percent higher this year and headed for a second consecutive quarterly gain.
Brent oil for May settlement slid 42 cents to $125.12 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $18.24.
Fuel Demand
U.S. gasoline consumption slipped below year-earlier levels for the 30th consecutive week, MasterCard’s SpendingPulse report showed yesterday. The average pump price rose 4 cents in the past week to $3.88 a gallon, the highest price since May 20.
Stockpiles of the motor fuel rose 1.3 million barrels last week, the data from the industry-funded API showed. They are estimated to fall 1.6 million barrels in today’s Energy Department report, according to the median of 12 analyst estimates in the Bloomberg News survey. Distillate inventories, a category that includes heating oil and diesel, slipped 1.4 million barrels compared with a forecast for a 500,000 barrel decline.
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.
The release of oil from the Strategic Petroleum Reserve “has been in consideration for some time,” Charles McConnell, acting assistant secretary for fossil energy, said at a hearing inWashington yesterday. No decision has been made, he said.
The Obama administration is studying a release from the reserves as it monitors rising gasoline prices and political turmoil in the Middle East, Energy Secretary Steven Chu and Interior Secretary Ken Salazar said separately on Feb. 28.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore atakwiatkowsk2@bloomberg.net
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