By Christian Schmollinger and Ben Sharples
April 8 -- Crude oil traded below $86 a barrel in New York after a bigger-than-forecast inventory gain in the U.S., the world’s largest energy consumer.
Oil dropped earlier today following the Energy Department report that crude supplies rose 1.98 million barrels to 356.2 million last week. Stockpiles were expected to climb by 1.35 million barrels, according to a Bloomberg News analyst survey. Machinery orders in Japan, the world’s third-largest oil user, unexpectedly fell in February.
“The report was bearish really any way you look at it,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “So there was a bit of heat coming out of the market but it’s OK since were trading on expectations on the economy. And the economy is going to be going in fits and starts.”
Crude oil for May delivery was at $85.73 a barrel, down 15 cents, in electronic trading on the New York Mercantile Exchange at 2:48 p.m. Singapore time, after falling as low as $85.49. Yesterday, the contract declined 96 cents, or 1.1 percent, to settle at $85.88, dropping from an 18-month intraday high of $87.09 reached on April 6.
Orders for factory equipment and items such as power generators, an indicator of business investment in three to six months, declined 5.4 percent from January, the Cabinet Office said today in Tokyo. The median estimate of 31 economists surveyed by Bloomberg was for a 3.7 percent gain.
“Oil was getting a little bit frothy and probably out of line with where the fundamentals are at the moment,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “We had a rise in crude stocks, which is not an isolated incident. It does seem that the supply overhang in the U.S. isn’t being properly addressed.”
Dollar Gains
Oil also dropped as the dollar gained against the euro for a fifth day, reducing the investment appeal of commodities. The U.S. currency was at $1.3319 to the 16-nation euro at 2:48 p.m. in Tokyo, from $1.3344 yesterday in New York.
The euro weakened amid speculation Greece may default on its debt as early as this year, even as leaders tried to dispel fears the nation is unhappy with a bailout plan.
U.S. imports of crude oil last week gained 5.5 percent to 9.56 million barrels a day, the most since September, the Energy Department report showed. Fuel imports climbed 7.5 percent to 2.76 million barrels a day, the highest level since the week ended Feb. 5.
Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 1.07 million barrels to 145.7 million, the first gain in 10 weeks. A 1.13 million-barrel drop was forecast, according to the median of 14 responses by analysts in the Bloomberg News survey.
Gasoline Stocks
Gasoline supplies fell 2.5 million barrels to 222.4 million, the report showed. A 1 million-barrel decline was forecast.
Refineries operated at 84.5 percent of capacity, the highest rate since the week ended Oct. 2. The gain in refinery operating rates has coincided with a drop in the profit margin, or crack spread, for refining crude.
The profit from producing two barrels of gasoline and one of diesel fuel from three barrels of crude, the 3-2-1 crack, has dropped 12 percent to $10.44 a barrel today since reaching a high this year of $11.89 a barrel.
“The only way that the cracks were being held up was because refiners were cutting back runs,” said Mitsubishi’s Nunan. “We’re going to see cycles all this year in the cracks and the run rates because there is too much refining capacity right now.”
Europe’s economy stagnated in the fourth quarter as companies cut spending. Gross domestic product in the 16-nation euro region remained unchanged compared with the third quarter, when it rose 0.4 percent, the European Union’s statistics office in Luxembourg said yesterday. It had previously reported a fourth-quarter expansion of 0.1 percent.
Brent crude oil for May settlement fell as much as 40 cents, or 0.5 percent to $85.19 a barrel on the London-based ICE Futures Europe exchange. It was at $85.34 at 2:48 p.m. Singapore time. The contract fell 56 cents, or 0.7 percent, to end the session at $85.59 a barrel yesterday.
Source: http://www.bloomberg.com/apps/news?sid=a.ilEC11KaTc&pid=20601087
April 8 -- Crude oil traded below $86 a barrel in New York after a bigger-than-forecast inventory gain in the U.S., the world’s largest energy consumer.
Oil dropped earlier today following the Energy Department report that crude supplies rose 1.98 million barrels to 356.2 million last week. Stockpiles were expected to climb by 1.35 million barrels, according to a Bloomberg News analyst survey. Machinery orders in Japan, the world’s third-largest oil user, unexpectedly fell in February.
“The report was bearish really any way you look at it,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “So there was a bit of heat coming out of the market but it’s OK since were trading on expectations on the economy. And the economy is going to be going in fits and starts.”
Crude oil for May delivery was at $85.73 a barrel, down 15 cents, in electronic trading on the New York Mercantile Exchange at 2:48 p.m. Singapore time, after falling as low as $85.49. Yesterday, the contract declined 96 cents, or 1.1 percent, to settle at $85.88, dropping from an 18-month intraday high of $87.09 reached on April 6.
Orders for factory equipment and items such as power generators, an indicator of business investment in three to six months, declined 5.4 percent from January, the Cabinet Office said today in Tokyo. The median estimate of 31 economists surveyed by Bloomberg was for a 3.7 percent gain.
“Oil was getting a little bit frothy and probably out of line with where the fundamentals are at the moment,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “We had a rise in crude stocks, which is not an isolated incident. It does seem that the supply overhang in the U.S. isn’t being properly addressed.”
Dollar Gains
Oil also dropped as the dollar gained against the euro for a fifth day, reducing the investment appeal of commodities. The U.S. currency was at $1.3319 to the 16-nation euro at 2:48 p.m. in Tokyo, from $1.3344 yesterday in New York.
The euro weakened amid speculation Greece may default on its debt as early as this year, even as leaders tried to dispel fears the nation is unhappy with a bailout plan.
U.S. imports of crude oil last week gained 5.5 percent to 9.56 million barrels a day, the most since September, the Energy Department report showed. Fuel imports climbed 7.5 percent to 2.76 million barrels a day, the highest level since the week ended Feb. 5.
Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 1.07 million barrels to 145.7 million, the first gain in 10 weeks. A 1.13 million-barrel drop was forecast, according to the median of 14 responses by analysts in the Bloomberg News survey.
Gasoline Stocks
Gasoline supplies fell 2.5 million barrels to 222.4 million, the report showed. A 1 million-barrel decline was forecast.
Refineries operated at 84.5 percent of capacity, the highest rate since the week ended Oct. 2. The gain in refinery operating rates has coincided with a drop in the profit margin, or crack spread, for refining crude.
The profit from producing two barrels of gasoline and one of diesel fuel from three barrels of crude, the 3-2-1 crack, has dropped 12 percent to $10.44 a barrel today since reaching a high this year of $11.89 a barrel.
“The only way that the cracks were being held up was because refiners were cutting back runs,” said Mitsubishi’s Nunan. “We’re going to see cycles all this year in the cracks and the run rates because there is too much refining capacity right now.”
Europe’s economy stagnated in the fourth quarter as companies cut spending. Gross domestic product in the 16-nation euro region remained unchanged compared with the third quarter, when it rose 0.4 percent, the European Union’s statistics office in Luxembourg said yesterday. It had previously reported a fourth-quarter expansion of 0.1 percent.
Brent crude oil for May settlement fell as much as 40 cents, or 0.5 percent to $85.19 a barrel on the London-based ICE Futures Europe exchange. It was at $85.34 at 2:48 p.m. Singapore time. The contract fell 56 cents, or 0.7 percent, to end the session at $85.59 a barrel yesterday.
Source: http://www.bloomberg.com/apps/news?sid=a.ilEC11KaTc&pid=20601087
Comments
Post a Comment