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Oil Declines on Forecast U.S. Supply Rose to 6-Month High

Published: March 14, 2012 | 10:07 am
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Oil fell in New York on forecasts that stockpiles rose to the highest level in six months in the U.S., the world’s largest crude consumer.

Futures declined as much as 0.4 percent before an Energy Department report today that will show crude supplies climbed last week, according to a Bloomberg News survey. Stockpiles increased by 2.8 million barrels to 349.3 million, according a report yesterday from the American Petroleum Institute.

“Inventories continue to rise and that might put a cap on prices,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “I can’t see any negative bits and pieces out there at the moment that will really stop oil trading back to the top end” of a range of $104 to $110 a barrel in New York.

Crude for April delivery fell as much as 40 cents to $106.31 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $106.43 at 3:31 p.m. Singapore time. It increased 37 cents yesterday to $106.71 a barrel, the highest settlement since March 9. Prices have gained 7.6 percent this year.

Brent oil for April settlement on the London-based ICE Futures Europe exchange slid 0.2 percent to $125.99. The contract expires tomorrow. The more actively traded May future was down 41 cents at $125.26. The European benchmark crude was at a premium of $19.45 to New York futures. The gap yesterday was $19.51, the widest based on closing prices since Oct. 24.

Slowing Demand
Oil yesterday advanced 0.4 percent as investors speculated fuel demand may increase amid signs the U.S. economy is strengthening. Commerce Department data showed retail sales in the U.S. rose the most in five months. The Federal Reserve also lifted its assessment of the economy and said most of the country’s biggest banks passed stress tests.

Signs of a slowdown in fuel demand still persist. U.S. gasoline consumption last week fell 7.2 percent below a year earlier, the biggest decline in that measure in more than two years, MasterCard Inc. (MA) said.

Drivers bought 8.49 million barrels a days of gasoline in the seven days ended March 9, according to MasterCard’s SpendingPulse report. It was the 28th consecutive week that consumption was lower than year-earlier levels.

Fuel Stockpiles
U.S. crude inventories probably increased 1.6 million in the week ended March 9, according to the median estimate of nine analysts surveyed by Bloomberg News. Yesterday, the industry- funded American Petroleum Institute said supplies climbed 2.8 million barrels to 349.3 million.

Gasoline stockpiles fell 1 million barrels, after dropping the previous three weeks, the survey showed. The API said inventories of the motor fuel dropped 2.1 million barrels to 226.3 million, the lowest in six weeks.

The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. in Washington. The International Energy Agency is set to release its monthly oil market report today at 9 a.m. London time.

Oil in New York has technical support around $106 a barrel today, according to data compiled by Bloomberg. On the daily chart, that’s the bottom of a symmetrical triangle going back more than two weeks. The top of the triangle, representing chart resistance, is about $107.67 today. Investors tend to buy contracts when prices break upward from a triangle pattern or sell when support is breached.

U.S. retail sales climbed 1.1 percent in February after a 0.6 percent gain in January that was more than initially estimated, the Commerce Department said. Fifteen of the U.S.’s 19 largest banks could maintain adequate capital levels even in a severe recession that assumes they keep paying dividends and buying back stock, the Fed said in a statement at the conclusion of a meeting yesterday in Washington.

In a separate statement, policy makers said they expect “moderate” economic growth as the labor market gathers strength. In its last statement in January, the central bank said growth would be “modest.” The Dow Jones Industrial Average stock index rose to the highest level since 2007.

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