April 8, 2010 at 9:03 pm #2712
Oil Falls to Lowest in a Week After U.S. Supplies Top Forecast
By Grant Smith
April 8, 2010 (Bloomberg) — Crude oil dropped below $85 a barrel in New York for the first time in a week after a report showed U.S. crude inventories increased more than forecast last week.
The U.S. Energy Department said yesterday that crude supplies rose 1.98 million barrels to 356.2 million last week. Stockpiles were expected to climb by 1.35 million barrels, according to a Bloomberg News analyst survey. Oil slid as the dollar strengthened against the euro for a fifth day, making commodities less appealing for hedging against inflation.
“We’ve seen a bit of a bubble in oil with no fundamental basis for prices of $80 to $90 a barrel,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “U.S. storage is at very high levels, so oil stocks could come for several weeks without a big effect on prices.”
Crude oil for May delivery dropped as much as $1, or 1.2 percent, to $84.88 a barrel in electronic trading on the New York Mercantile Exchange. It traded for $84.94 at 12:39 p.m. London time. Brent crude oil for May settlement was down 90 cents at $84.69 on the London-based ICE Futures Europe exchange.
The U.S. currency was at $1.3301 to the euro at 12:41 p.m. in London, compared with $1.3344 yesterday in New York, amid concern Greece will default on its debt.
Yesterday, oil declined 1.1 percent in New York to settle at $85.88, dropping from an 18-month intraday high of $87.09 reached on April 6.
“Oil was getting a little bit frothy and probably out of line with where the fundamentals are at the moment,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “We had a rise in crude stocks, which is not an isolated incident. It does seem that the supply overhang in the U.S. isn’t being properly addressed.”
U.S. imports of crude oil last week gained 5.5 percent to 9.56 million barrels a day, the most since September, the Energy Department report showed. Fuel imports climbed 7.5 percent to 2.76 million barrels a day, the highest level since the week ended Feb. 5.
Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 1.07 million barrels to 145.7 million, the first gain in 10 weeks. A 1.13 million-barrel drop was forecast, according to the median of 14 responses by analysts in the Bloomberg News survey.
Gasoline supplies fell 2.5 million barrels to 222.4 million, the report showed. A 1 million-barrel decline was forecast.
Refineries operated at 84.5 percent of capacity, the highest rate since the week ended Oct. 2. The gain in refinery operating rates has coincided with a drop in the profit margin, or crack spread, for refining crude.
To contact the reporter on this story: Grant Smith in London at email@example.com Last Updated: April 8, 2010 07:48 EDT
April 8, 2010 at 9:05 pm #5692
I don’t understand why the oil industry & its traders are letting Wall Street Fund traders & Speculators steal their profits as they manipulate prices on both oil & products to trigger a sale for their futures hedge on higher prices EVEN THOUGH FUNDAMENTALS DEMAND LOWER PRICES OR REFINERY ECONOMIC CLOSURES.
If oilmen don’t stop playing the ostrich game and take this issue head on ……. then they deserve to go out of business. The industry is well into the production peaks for gasoline season when historically rates are maxed out & imports are needed but fundamentals are saying there is very LOW demand for either crude or products! Utilization rates are at less 84% (which are recent highs); companies are taking turnarounds to stay in tankage and stop margin losses; crude inventories are at highest in ten years and rising; even small increase in production utilization are now causing diesel prices to drop (diesel storage is also at high levels) …… SO WHY HELL ARE PRICES GOING UP???
Speculators/Mutual Fund traders have taken forward positions at $95-100/BBL on crude and now they are using any excuse and pushing paper prices to rise against strongest fundamental signals to drop (as article indicates even $80-85/Bbl crude is overpriced now) – just so they can unload positions and steal profits from the industry yet again. Come on management pull your heads out and take these guys out before they take you out. Make some big reverse plays and back them up.
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