By Ben Sharples and Ann Koh
April 27 -- Oil fell for a second day as the dollar gained and analysts forecast that U.S. crude supplies increased, signaling fuel demand in the world’s biggest energy user may be slow to recover. Oil dropped 1.1 percent yesterday as the greenback advanced on concern the Greek bailout plan faces hurdles and as credit default swaps in Portugal, Western Europe’s poorest country, show investors rank its debt as the world’s eighth-riskiest. U.S. crude inventories probably rose 1 million barrels last week, according to analysts surveyed before an Energy Department report tomorrow.
“It’s like a ticking time bomb in Europe,” said Clarence Chu, a trader with options dealer Hudson Capital Energy in Singapore. “At some point they can’t keep pumping in cash. That will really cripple the recovery and affect oil.”
Crude oil for June delivery fell as much as 67 cents, or 0.8 percent, to $83.53 a barrel in electronic trading on the New York Mercantile Exchange, and was at $83.65 at 3 p.m. Singapore time. Yesterday, the contract declined 92 cents to $84.20 a barrel after reaching $85.63, the highest intraday level in more than a week.
The dollar traded near its strongest level in almost three weeks versus the yen on speculation the Federal Reserve is moving closer to withdrawing stimulus as the U.S. economic recovery gathers momentum.
The U.S. currency was at $1.3368 per euro at 1:38 p.m. Singapore time from $1.3383 in New York yesterday. A stronger dollar limits investor need for commodities to hedge against inflation. The dollar traded at 93.76 yen from 93.96 yesterday, when it touched 94.36, the strongest level since April 6.
U.S. Regulation
After the market closed, U.S. Senate Republicans blocked Democrats from advancing their plan to overhaul Wall Street regulation, saying they want to force changes before beginning full debate.
“We’ve got the Greek sovereign debt issue burning away in the background, and we also had the Senate Democrats proposing new legislation on the derivative markets, which I don’t think can be construed as a positive thing for commodity and equity markets,” Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney, said in a telephone interview.
Tomorrow’s U.S. government report will probably show gasoline inventories climbed 500,000 barrels from 225 million the prior week, according to analyst estimates in a Bloomberg News survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, were estimated to have risen 1.25 million barrels. Refinery operating rates are estimated to have been unchanged last week, after five weeks of gains, the survey shows.
“We’re yet to see significant recovery in demand,” CWA’s Hassall said. “Looking at the trend, it doesn’t suggest that U.S. oil demand is recovering rapidly.”
Brent crude for June settlement fell as much as 39 cents, or 0.5 percent, to $86.44 a barrel on the London-based ICE Futures Europe exchange, and was at $86.63 a barrel at 3:01 p.m. Singapore time. Yesterday, the contract declined 42 cents, or 0.5 percent, to $86.83.
Source: http://www.bloomberg.com/apps/news?sid=aaLtdt0iZ4MM&pid=20601087
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