Crude Oil Is Little Changed After Gaining on Stockpile Decline
By Grant Smith and Christian Schmollinger
Bloomberg
Crude oil was little changed in New York after gaining on an Energy Department report that showed U.S. inventories declined more than expected last week.
Stockpiles fell to the lowest since January 2005, and supplies of distillate fuel, including heating oil, dropped the most since February. Prices initially rose after yesterday’s assassination of Benazir Bhutto, Pakistan’s former prime minister, heightened concern violence would persist in the nuclear-armed nation.
“The U.S. stock data has been supportive for product prices,'’ said Robert Laughlin, a senior broker at MF Global Ltd. in London. “Whilst the Pakistan problems are not directly oil- related, Bhutto was such a high-profile figure her assassination has resurfaced the global terror alert.'’
Crude oil for February delivery was at $96.64 a barrel, up 2 cents, on the New York Mercantile Exchange at 9:07 a.m. London time. Oil is heading for its biggest annual gain in eight years.
Brent crude for February settlement rose 13 cents to $94.91 a barrel at 9:10 a.m. local time on London’s ICE Futures Europe exchange.
New York futures surged to a record $99.29 on Nov. 21 as a weaker dollar made oil cheaper to purchase in other currencies. Prices have gained 59 percent this year, which would be the biggest annual increase since 1999, when prices more than doubled to $25.60 a barrel.
Supply Concern
Oil has jumped this year on concern supply may be disrupted amid Iran’s nuclear standoff with the United Nations and Turkey’s attacks on Kurdish rebels in Iraq. Prices also surged on rising demand from China and India, and falling stockpiles in Europe and the U.S.
Oil stockpiles in the U.S. declined 3.3 million barrels to 293.6 million last week, the lowest in almost three years, the Energy Department report showed. Supplies were expected to drop 1.5 million barrels, according to the median of responses by 12 analysts surveyed by Bloomberg News.
The department released its weekly report on inventories at 10:30 a.m. yesterday in Washington, a day later than usual because of the Christmas holiday.
Trading volumes have been below average because of end-of- year holidays. Nymex oil traders exchanged an estimated 241,452 contracts yesterday, down 31 percent from a week earlier, according to data compiled by Bloomberg.
“There is some bias to the upside given the much-larger- than-anticipated drawdown, not just in crude but also in distillates,'’ said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. Bhutto’s death “is another source of instability that may well affect the region,'’ he said.
Distillates Drop
Supplies of distillate fuel fell 2.77 million barrels to 126.6 million barrels, the Energy Department report showed. A 900,000-barrel decline was expected, according to the median of responses.
Gasoline supplies increased 636,000 barrels to 205.9 million last week, the report showed. A 1.4 million-barrel gain was expected.
Total implied fuel demand in the U.S. averaged 21.1 million barrels a day in the four weeks ended Dec. 21, up 1.6 percent from a year earlier, according to the department. Consumption of distillate fuel averaged 4.5 million barrels a day over the period, up 5.7 percent from a year earlier.
The oil market has been sensitive to suspected Islamic terror assaults since the Sept. 11, 2001, attacks on the U.S. Pakistan borders Iran, which holds the world’s second-biggest oil reserves, and is located along the Arabian Sea, where tankers travel before entering the Persian Gulf.