Oil rises on speculation US fuel supply dropped
Crude oil climbed for a second day on speculation that recovering demand in the US is causing fuel supplies to drop.
US distillate fuel stockpiles probably fell last week as wholesalers prepared for colder weather, a Bloomberg News survey showed before an Energy Department report tomorrow.
Oil also advanced after a report showed an increase in US manufacturing and as the dollar gave up gains against the euro, boosting the appeal of commodities to investors.
“The US inventory numbers will be important,” said Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich. “Demand in the US has been rather weak and inventories have been falling only because of low import numbers, not because of strength in demand.”
Crude oil for March delivery climbed as much as $1.01, or 1.4pc, to $75.44 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.29 at 10:51am London time. Yesterday, the contract rose 2.1pc to settle at $74.43, the biggest one-day increase since January 4.
Oil advanced the most in four weeks yesterday after a report showed manufacturing in the US increased at the fastest pace since 2004.
The Institute for Supply Management’s factory index climbed to 58.4 in January, data showed yesterday, exceeding the median forecast of 55.5 from 67 economists surveyed by Bloomberg News. Readings higher than 50 signal an expansion. Manufacturing accounts for about 12 percent of the economy.
Fuel supply forecasts
US distillate fuel stockpiles, including heating oil and diesel, declined 1.15 million barrels in the week ended January 29, based on the median of 12 estimates from analysts before tomorrow’s the Energy Department report. Supplies previously climbed to 157.5 million barrels, 16.2pc above the five- year average level.
The dollar weakened against the euro, falling as low as $1.3956 against the European currency, after rising earlier as high as $1.3887.
Colder weather moved into the US Northeast, which consumes about four-fifths of the country’s heating oil, in the final days of last month. Temperatures across the eastern states will be below normal from February 9 to February 15, according to the National Weather Service.
Refineries operated at 78.4pc of capacity, unchanged from the previous week, according to the median of responses.
Analysts were split over whether stockpiles of crude oil rose or fell last week. Inventories climbed 400,000 barrels from 326.7 million the previous week, according to the survey. Six of the respondents said there was a gain, four forecast a decline and two estimated that there was no change.