Oil drops for a second day
Oil fell for a second day after an industry report showed US fuel supplies gained and as concern that Europe’s debt crisis will spread strengthened the dollar.
Crude dropped as much as 1.6pc after the American Petroleum Institute said yesterday that petrol stockpiles rose 2.42 million barrels last week.
The US currency advanced versus the euro as Moody’s Investors Service said Spain’s credit rating may be cut. A stronger dollar curbs the appeal of commodities to investors.
“The big builds in fuel supplies are a sign of weak demand,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St Louis. “The primary story for the oil and gold markets today will be the strength of the dollar against the euro.”
Crude oil for January delivery fell 90 cents, or 1pc, to $87.38 a barrel at 9:01am on the New York Mercantile Exchange. Prices are up 24pc from a year ago.
Brent crude oil for January settlement slipped 42 cents, or 0.5pc, to $90.79 a barrel on the London-based ICE Futures exchange.
The dollar increased 0.2pc against the euro to $1.3349 at 9:04am, up from $1.3378 yesterday. The US currency rose against all except four of its 16 major peers.
Inventories of distillate fuel, a category that includes heating oil and diesel, rose 1.95 million barrels to 161.2 million, the biggest gain since September, yesterday’s report showed. Crude-oil supplies dropped 1.44 million barrels, the API said.
The US energy department’s report, scheduled to be released at 10:30am today in Washington, will probably show petroleum supplies increased 2 million barrels in the week ended December 10, according to the median of 17 analyst responses in a Bloomberg News survey.
US petroleum demand at the pump slid 2.7pc last week as retail prices rose to the highest level in 25 months, according to a MasterCard SpendingPulse report yesterday.
Fuel demand was 1.3pc below the same period a year earlier, MasterCard said. That’s the largest drop in year-over- year consumption since October 29.