Oil declined after breaking through $90 a barrel yesterday as on concern Europe’s debt crisis will hurt fuel consumption, and after an industry report showed US gasoline supplies surged the most since January.
Futures fell a second day as traders secured profits from a rally to $90.76 a barrel, the highest in 26 months. The dollar strengthened after European ministers ruled out immediate aid for debt ridden Portugal and Spain, dulling investor appetite for commodities. The American Petroleum Institute said gasoline stockpiles increased 4.8 million barrels last week.
Crude for January delivery lost as much as $1.08, or 1.2 percent, to $87.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $88.37 at 1:32 p.m. London time. Brent crude for next month settlement fell as much as $1.12, or 1.2 percent, to $90.27 a barrel on the London based ICE Futures Europe exchange.
Christopher Bellew, senior broker at Bache Commodities Ltd in London said: “Oil is facing contradictory pressures. On the one hand it’s being pumped up by Chinese demand and colder weather, while on the other relatively high supplies and economic anxieties are dragging it down.”
Yesterday, futures in New York snapped a four day advance after rising to the highest since October 8, 2008. Oil has risen 11 percent this year, heading for a second annual increase. The market soared 78 percent in 2009, the most since prices more than doubled in 1999.
Oil’s rally is unlikely to coax OPEC into raising production quotas at a meeting this week in Ecuador, as group members consider the global economic recovery strong enough to withstand price gains, according to a Bloomberg News survey.
The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supply, will maintain limits set in 2008 when representatives gather in Quito on December 11, according to all but one of 39 analysts and traders surveyed. Oil ministers from Angola, Venezuela and Libya say the group will probably stand by its target to pump 24.845 million barrels a day.
Crude slipped today amid speculation that China, the world’s largest energy user, will raise interest rates this week to tame inflation. Asian stocks fell by the most in two weeks after China’s statistics bureau brought forward the release date of economic indicators by two days to Dec. 11, heightening expectations that the People’s Bank of China will act.
Futures later pared losses as December futures on the Standard & Poor’s 500 stock index advanced 1.6 to 1,224.80.
European institutions must act more quickly to stem contagion from the sovereign debt crisis, International Monetary Fund Managing Director Dominique Strauss Kahn said in Athens yesterday. The dollar index, which tracks the currency against six major trading partners, gained 0.4 percent to 80.16.
Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd in Melbourne, in a note today said: “The market continues to worry over Europe’s ability to prevent debt issues from spreading. Crude prices lost momentum, potentially as cautious long investors took profits due to uncertainty in the market.”
US crude stockpiles decreased 7.34 million barrels to 349.3 million last week, the industry funded API said yesterday. An Energy Department report today will probably show supplies dropped 1.4 million barrels, according to the median estimate from 16 analysts surveyed by Bloomberg News.
Distillate fuel inventories, which include heating oil and diesel, increased 1.7 million barrels to 159.3 million, the API said. The Energy Department’s report, due at 10:30 am in Washington, is expected to show stockpiles declined 900,000 barrels, based on the survey. Gasoline inventories probably slipped 300,000 barrels.
Follow us on
