Monday 23 October 2017

Oil falls first time in five days

Oil fell in New York, snapping four days of gains, after analysts forecast an increase in US petroleum supplies, signaling demand recovery in the world’s largest crude user may falter.

Futures slipped as US equities dropped and the euro weakened from a five-month high against the dollar after renewed signs of debt problems at European banks and countries such as Ireland and Portugal.

A US Energy Department report tomorrow may show petroleum stockpiles climbed to a six-month high.

“We really haven’t made any headway into stockpiles,” said Ben Westmore, a minerals and energy economist at National Australia Bank in Melbourne. “Activity hasn’t improved. The crude market followed equity markets overnight.”

The November contract lost as much as 41 cents, or 0.5pc, to $76.11 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.12 at 12:42pm Singapore time.

Yesterday it added 3 cents to settle at $76.52. Prices are down 4pc this year.

Brent crude oil for November delivery declined as much as 43 cents, or 0.6pc, to $78.14 on the London-based ICE Futures Europe exchange. Yesterday it fell 30 cents, or 0.4pc, to settle at $78.57.

November Brent’s premium to the corresponding West Texas future in New York narrowed to $1.96 a barrel today, down from $3.45 a week earlier.

Crude stockpiles

Petroleum inventories probably rose 750,000 barrels last week from 226.1 million, according to the median of nine analyst estimates before the Energy Department report. The gain would leave supplies at the highest level since March 12.

Crude stockpiles probably declined 600,000 barrels last week from 358.3 million, according to the Bloomberg News survey.

Inventories of distillate fuel, a category that includes heating oil and diesel, climbed 500,000 barrels, the survey shows.

Refineries probably operated at 87.3pc of capacity, down 0.5 percentage point from the previous week, according to the Bloomberg survey. Operating rates unexpectedly increased 0.2 percentage point in the week ended September 17.

Doji Signal

Oil prices may decline based on technical factors used by traders to judge price movements. Crude closed only 3 cents higher from its open, creating what is known as a doji formation, which uses candle charts to track levels and indicate a reversal in price direction.

“Yesterday’s tight open-close could qualify as a doji signal, signifying an end of the uptrend seen last week,” Stephen Schork, president of consultants The Schork Group Inc in Villanova, said in a report today.

Crude fell yesterday after the Standard & Poor’s 500 Index lost 0.6pc, to 1,142.16 in New York. The Dow dropped 48.22 points, or 0.4pc, to 10,812.04.

The S&P/Case Shiller 20-city home price index probably declined 0.1pc in July, the first slide in four months, according to a Bloomberg News survey before a report today.

In the 12 months ended July, home values probably rose 3.1pc, down from a 4.2pc gain in the year ended June.

“It does seem that the US housing market is starting to bottom,” National Australia Bank’s Westmore said.

“People will be looking closely at house prices to work out whether consumer spending is going to pick up, and as a result, all of those end uses for oil.”

Bloomberg

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