Crude oil heads for first decline in three weeks
Crude oil headed for its first weekly decline in three weeks, as retreating equity markets and growing supplies sowed doubts about the economic recovery.
Oil traded around $76 a barrel in New York, near its lowest in a week. The Organisation of Petroleum Exporting Countries will increase shipments to consumers, according to tanker-tracker Oil Movements, even though crude inventories in the US are 8.4pc above their seasonal average.
The US economy grew at a 2.7pc annual rate in the first quarter, less than previously calculated, a report today showed.
“Inventories are still very high and there is a lot of uncertainty over economies in the US, Europe and China,” said Andy Sommer, senior analyst at EGL AG in Dietikon, Switzerland.
“Everyone is waiting for fundamentals to tighten or soften and until then the market is trading sideways.”
Crude for August delivery was at $76.71 a barrel, 20 cents higher, in electronic trading on the New York Mercantile Exchange at 1:34pm in London.
Brent crude for August delivery was at $76.45 a barrel on the ICE Futures Europe exchange in London, down 2 cents.
Prices are set to decline 0.6pc this week, ending two weeks of advances. The Stoxx Europe 600 Index is poised for a 2.4pc loss this week after four straight weeks of gains.
The US economy grew at a 2.7pc annual rate in the first quarter, revised down from a previous 3pc estimate, the Commerce Department said, reflecting a smaller gain in consumer spending and a bigger trade gap.
Analysts surveyed by Bloomberg News were split over whether crude oil prices will rise or fall next week amid mixed economic reports and ample stockpiles.
‘Mood Is cautious’
Sixteen of 47 analysts, or 34pc, forecast crude will advance through July 2.
Sixteen more respondents predicted that futures will decline. Fifteen said there will be little change. Last week, 52pc of analysts expected an increase.
“The macro mood is still cautious,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney.
“The durable goods numbers offered some positives for the demand outlook for oil. I doubt whether crude can rally without general market sentiment improving.”
The OPEC will increase shipments as Asian refiners boost imports to meet demand for driving fuels, according to Oil Movements.
OPEC, which pumps about 40pc of the world’s crude, will ship 23.73 million barrels a day in the four weeks to July 10, up 0.7pc from the month ended June 12, the consultant said in a report yesterday. The data excludes Ecuador and Angola.
The International Energy Agency, an adviser to oil-consuming nations, said on June 23 growth in world fuel demand will decline over the next five years as the pace of Chinese consumption slows.
The IEA estimates annual demand growth will slow every year to average 1 percent in 2015, or 940,000 barrels a day, from 1.9 percent, or 1.62 million barrels a day, in 2010, it said on June 23 in its Medium-Term Oil and Gas Markets 2010 report.
US crude stockpiles rose 2.02 million barrels to 365.1 million in the week ended June 18, according to the Energy Department.
Supplies were forecast to drop 800,000 barrels, according to analysts surveyed by Bloomberg News.