Oil rises from one-week low as equities soothe supply concern
Crude oil rebounded from its lowest level in a week as a declining dollar and advancing equity markets tempered concern that US fuel supplies are excessive.
An Energy Department report today will probably show US crude inventories grew by 1.2 million barrels, or 0.3pc, last week to their highest level since July 23, according to a Bloomberg News survey.
Asian stocks rose after China’s manufacturing expanded at a faster pace than expected.
“I’m not in the double-dip camp,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “I see the numbers primarily as a bump on the road towards recovery.”
The October contract on the New York Mercantile Exchange traded for $72.17 a barrel, 25 cents higher as of 9:43am London time.
Yesterday, it fell $2.78, or 3.7pc, to $71.92, the biggest drop since June 4 and the lowest settlement since August 24.
Brent crude for October settlement climbed as much as 63 cents, or 0.8pc, to $75.27 on the ICE Futures Europe Exchange in London.
The dollar slipped 0.5pc to $1.2748 against the single European currency, heightening the appeal of using commodities to protect against inflation.
The MSCI Asia Pacific Index gained 1.4pc to 118.11 as of 5:37pm in Tokyo.
The Energy Department is scheduled to release its weekly report at 10:30am in Washington.
Refineries probably operated at 87.7pc of capacity, unchanged from a week earlier, the survey showed. Operating rates fell 2.3 percentage points to the lowest level since May in the week ended August 20.
Petroleum inventories dropped by 250,000 barrels, or 0.1pc, from 225.6 million, according to the poll.
Stockpiles in the week ended August 20 were 12pc higher than the five- year average for the period, according to the Energy Department.
The American Petroleum Institute said yesterday that crude oil inventories rose by 4.77 million barrels last week to 361.5 million, while petroleum inventories dropped 589,000 barrels to 225.6 million.
The industry-funded API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines.
The US government requires that reports be filed with the Energy Department for its weekly survey.
Prices declined yesterday after forecasts that Hurricane Earl will pelt the US East Coast, keeping beachgoers and travelers at home and curbing fuel demand during the Labour Day holiday.
The weekend is the traditional end of the US summer driving season, the peak petroleum demand period.
Earl was 1,460 kilometers south-southeast of Cape Hatteras in North Carolina, moving northwest at 15 miles per hour with maximum sustained winds of 135 mph, the National Hurricane Centre said in an advisory at 11pm Miami time yesterday.