Oil trades near one-week high as stockpiles slide

OIL TRADED near the highest level in a week in New York after the American Petroleum Institute said crude inventories fell in the U.S. / BLOOMBERG FILE PHOTO
OIL TRADED near the highest level in a week in New York after the American Petroleum Institute said crude inventories fell in the U.S. / BLOOMBERG FILE PHOTO

NEW YORK – Oil traded near the highest level in a week in New York after the American Petroleum Institute said crude inventories fell in the U.S., the world’s biggest consumer of the commodity.

Futures were little changed after rising 0.4 percent yesterday. U.S. stockpiles decreased by 985,000 barrels last week, the industry-funded API said.

An Energy Department report today is forecast to show a gain of 2.8 million barrels. Goldman Sachs Group Inc. said crude prices will rise as demand growth outpaces production capacity.

“The API inventory is being accepted as a bullish factor,” said Ken Hasegawa, a commodity-derivative sales manager at Newedge Group in Tokyo who sees prices trading from $100 to $105 a barrel until at least the end of next week.

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“Because of the decrease in crude and products inventories, now we can see some gains in the oil market,” he added.

Crude for June delivery was at $103.64 a barrel, up 9 cents, in electronic trading on the New York Mercantile Exchange at 2:52 p.m. Singapore time.

The contract rose 44 cents to $103.55 yesterday, the highest close since April 17. Front-month prices are 4.9 percent higher this year.

Brent oil for June settlement gained 4 cents to $118.20 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $14.56, compared with $14.61 yesterday.

Oil’s advance in New York may stall as futures remain in a technical downtrend, according to data compiled by Bloomberg. On the daily chart, the top of a downward-sloping channel going back about two months is $104.38 a barrel today and represents technical resistance, where sell orders tend to be clustered.

Falling Inventories

Gasoline stockpiles decreased 3.64 million barrels and distillate-fuel inventories dropped 3.56 million barrels, the API’s weekly report showed.

Today’s Energy Department data may show a 1.5 million-barrel decline in gasoline supplies, according to the median of 11 estimates in a Bloomberg News survey of analysts. Distillates are predicted to gain 500,000 barrels.

The government requires that reports be filed with the Energy Department for its weekly survey. The API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines.

Oil prices will rise as demand is expanding faster than production capacity even as the global economy slows, Goldman Sachs said in a report e-mailed today.

Spare Capacity
“It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand,” said Jeffrey Currie, head of commodities research at Goldman Sachs in London.

Increased output by Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, has left global spare capacity at less than 1 million barrels a day, according to the report. Goldman reiterated a recommendation to buy September futures for West Texas Intermediate oil.

U.S. gasoline prices at the pump fell below year-earlier levels for the first time since at least October 2009, according to data from AAA, the largest U.S. motoring club.

The national average price for regular gasoline slid 0.9 cent on April 23 to $3.849 a gallon, according to Heathrow, Florida-based AAA. That’s down from $3.86 a year earlier and the lowest level since March 19.

Demand for the motor fuel was little changed last week and lower than consumption a year earlier, according to MasterCard Inc.

Drivers bought 60.81 million barrels of gasoline in the week ended April 20, versus 60.8 million the week before, MasterCard’s SpendingPulse report showed. That was 6.1 percent below the year-earlier level, the 34th straight decline in that measure.

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