Oil for September delivery in New York Fell for the first time in six days after a Report showed crude supplies rose in the U.S., the largest energy user.
U.S. stockpiles rose last week for the first time since April, the industry-funded American Petroleum Institute reported late yesterday. A Bloomberg News survey of analysts is expecting a government report today to show crude inventories dropped 2.1 million barrels. Oil imports by China, the world’s second- largest consumer, fell 2.8 percent in June from May, customs data showed.
“Inventories should be going down because this is the demand season for the U.S.,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “Instead, the inventories are up. This implies that the demand isn’t as strong as expected.”
Crude oil for September delivery dropped as much as 86 cents, or 1.3 percent, to $64.75 a barrel on the New York Mercantile Exchange, and was at $65.22 at 1:05 p.m. Singapore time. Yesterday, it rose 32 cents to end the session at $65.61. The August contract expired at $64.72 a barrel yesterday.
Crude prices climbed 8.7 percent from July 14 to July 21 as investors bought futures on expectations of higher fuel demand. Optimism that the worst of the global recession is over followed gains in U.S. leading economic indicators and as financial service companies said earnings climbed.
China’s crude imports in June fell to 16.6 million tons, or about 4.1 million barrels a day, from 17.1 million tons in May, the customs data showed.
‘Weak Fundamentals’
U.S. crude supplies climbed 3.1 million barrels to 349.9 million barrels in the week ending July 17, the API said. The group also reported that refinery utilization fell to 84 percent of capacity from 86 percent.
Oil-supply figures from the institute and the energy department moved in the same direction for the past six weeks and 76 percent of the time in the past four years, according to data compiled by Bloomberg.
“It is going to be difficult for oil to forge higher if we continue to get indications of weak fundamentals,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. If the API report is “any indication of how the DOE numbers are going to come in tonight, it’s a pretty bearish picture,” he said.
Inventories of gasoline rose 1.3 million barrels to 213.6 million, the API report said. The Energy Department is expected to say supplies increased by 650,000 barrels in the week ended July 17, according to the analyst survey.
Gasoline Prices
“Rising product inventories don’t bode well for demand for crude,” Hassall said. “Sixty dollars to $65 is a probable range for the short term.”
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the energy Department for its weekly survey.
Gasoline for August delivery dropped as much as 2.19 cents, or 1.2 percent, to $1.7901 a gallon. Yesterday, it climbed 2.26 cents, or 1.3 percent, to $1.812, the highest settlement since July 1.
U.S. stockpiles of distillate fuel, a category that includes diesel and heating oil, probably rose 1.5 million barrels, according to the analyst survey.
The department is scheduled to release its Weekly Petroleum Status Report today at 10:30 a.m. in Washington.
Brent crude for September settlement fell as much as 61 cents, or 0.9 percent, to $66.26 a barrel, on London’s ICE Futures Europe Exchange. It was at $66.60 a barrel at 12:46 p.m. Singapore time.