Crude gains for second day as U.S. fuel stockpiles seen shrinking

Fed stimulus commitment supports bulls

West Texas Intermediate rose for a second day amid speculation U.S. fuel supplies declined and after the Federal Reserve signaled it will maintain steps to sustain the economic recovery.

Futures climbed as much as 0.4 percent in New York. A “preponderance of data” would be needed before the central bank starts removing stimulus, Fed Chairman Ben S. Bernanke said yesterday. Gasoline and distillate-fuel inventories probably shrank last week while crude stockpiles expanded, according to a Bloomberg News survey before data from the Energy Information Administration today. World powers and Iran are resuming talks in Geneva over the Persian Gulf nation’s nuclear program.

“It’s not surprising, in the absence of any other factors, that there is a little bit of positive sentiment in the market on a risk-reward basis, particularly for short-term traders,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “But all of this could be overwhelmed very quickly. Further builds are expected” in crude supplies, he said.

WTI for December delivery, which expires today, gained as much as 38 cents to $93.72 a barrel on the New York Mercantile Exchange. The more-active January contract increased 33 cents to $94.22 at 12:30 p.m. Singapore time. The volume of all futures traded was about 51 percent below the 100-day average.

Brent for January settlement rose as much as 47 cents, or 0.4 percent, to $107.39 a barrel on the London-based ICE Futures Europe exchange. It was at a premium of $12.98 to WTI for the same month. The spread was $13.03 yesterday, the narrowest in a week based on closing prices.

Fuel Supplies

U.S. gasoline inventories slid by 300,000 barrels in the seven days ended Nov. 15, according to the median estimate of 11 analysts surveyed by Bloomberg. Stockpiles have fallen the previous five weeks to 209.2 million, the lowest level in a year, said the EIA, the Energy Department’s statistical arm.

The American Petroleum Institute yesterday reported an 84,000 barrel increase in supplies of the motor fuel. The industry group in Washington collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.

Distillate stockpiles, including heating oil and diesel, are forecast to have dropped by 280,000 barrels, according to the survey. Supplies decreased by 4.9 million, the API said.

Crude inventories are projected to have climbed by 1 million barrels, compared with a 512,000 barrel gain reported by the API. Stockpiles have expanded for eight weeks to 388.1 million amid a surge in production, government data show.

Iran Talks

Iran and the five permanent members of the United Nations Security Council plus Germany will hold their third round of negotiations in six weeks to break a decade-long deadlock.

Brent, the benchmark crude for half the world’s oil, advanced the most in almost two weeks on Nov. 8 after U.S. Secretary of State John Kerry downplayed the chances of a nuclear accord. Iranian Foreign Minister Mohammad Javad Zarif and European Union foreign policy chief Catherine Ashton will be joined in the negotiations by senior diplomats from China, France, Germany, Russia, the U.K. and the U.S.

Iran says its atomic development is for civilian energy and medical use and that it has a right to enrich uranium for peaceful purposes. The U.S. and its allies say Iran is covertly seeking nuclear-weapons capability.

Israeli officials, led by Prime Minister Benjamin Netanyahu, have criticized a potential agreement, which falls short of United Nations Security Council resolutions demanding Iran halt all enrichment. Saudi Arabia, the world’s largest oil exporter, has also expressed skepticism about a deal with a nation they regard as a threat to the region.

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