Oil rises on forecast of US supply reduction
Crude oil rose in New York, reversing yesterday’s decline, before a report forecast to show US crude supplies dropped last week.
Oil advanced as the dollar weakened to a six-week low against the euro after yesterday’s meeting of the Federal Open Market Committee, spurring demand for commodities to protect against inflation.
An Energy Department report today may show that US crude supplies shrank 1.75 million barrels from 357.4 million last week, according to a Bloomberg News survey.
“A rally would find further support from the dollar,” Stephen Schork, president of the Schork Group Inc, said in a report today.
The November contract climbed as much as 63 cents, or 0.8pc, to $75.60 a barrel in electronic trading on the New York Mercantile Exchange and was at $75.34 a barrel at 8:27am. Yesterday it lost $1.22.
Brent crude for November fell as much as 42 cents, or 0.5pc, to $78 a barrel on the London-based ICE Futures Europe exchange.
November Brent’s premium to the New York contract was at $3.20 a barrel today after reaching $3.45 yesterday.
Nymex crude for October delivery slipped $1.34, or 1.8pc, to $73.52 a barrel yesterday, the lowest closing price since August 31. The contract expired at the end of floor trading.
Futures fell yesterday after the American Petroleum Institute said crude inventories grew by 2.23 million barrels to 364.1 million, the highest level for this time of year in five years. Refineries probably ran at 86.8pc of capacity last week, according Bloomberg’s survey of analysts.
“Huge discrepancies often exist between the API and Department of Energy report,” Schork said. “We have the feeling this is going to be one of those weeks.”
Supplies of crude at the Cushing, Oklahoma, delivery point for New York futures fell by 219,000 barrels to 34.8 million, the API data showed.
Inventories in the US Midwest and the Gulf Coast, home to a majority of the country’s refining capacity fell.
The premium between the November New York oil future and December contract narrowed to $1.59 a barrel today. It was as wide as $1.75 on September 17.
The dollar slid to $1.33 per euro as of 8:29am in London from $1.3264 yesterday in New York, after earlier reaching $1.333, the weakest level since August 6.
US petroleum demand rebounded from a 23-month low last week, MasterCard Inc reported yesterday.
Motorists bought an average 9.01 million barrels a day of the motor fuel, up 1.9pc from the prior week, according to the weekly SpendingPulse report. It was the first increase in five weeks.