Oil Slides on Signs U.S. Supply Rising; Deutsche Bank Raises Price Outlook
Share retweet EmailPrint..Ben Sharples and Ann Koh, On Wednesday March 30, 2011, 3:13 am EDT Oil declined in New York as signs of rising U.S. crude supplies stoked speculation demand may falter in the world’s biggest consumer of the commodity.
Futures slid as much as 0.6 percent after the industry- funded American Petroleum Institute said stockpiles climbed 5.7 million barrels last week, advancing for the fourth week. Energy Department data today may show inventories rose 1.5 million barrels. Deutsche Bank AG raised its forecast for New York crude this year by 18 percent to $107.75 a barrel as prices reflect a “geopolitical risk premium”.
“Stockpiles are still going up,” Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, said today. “The market is focused on the fact that if oil remains high that will dampen expectations of a recovery.”
Crude for May delivery fell as much as 66 cents to $104.13 a barrel in electronic trading on the New York Mercantile Exchange, and was at $104.62 at 3:11 p.m. Singapore time. Yesterday, the contract rose 81 cents to settle at $104.79. Prices are 14 percent higher for the quarter and 7.8 percent for the month.
Brent crude for May settlement rose 6 cents, or 0.1 percent, to $115.22 a barrel on the London-based ICE Futures Europe exchange. Yesterday, the contract gained 36 cents, or 0.3 percent, to $115.16.
The European benchmark traded at a $10.44 premium over U.S. West Texas Intermediate futures. The difference between front- month contracts in London and New York surged to a record $19.54 on Feb. 21 as unrest spread in the Middle East and North Africa and stockpiles climbed at Cushing, Oklahoma, the delivery point for WTI. The gap averaged 76 cents last year.
U.S. Supplies
U.S. oil supplies probably climbed to the highest level since December, according to the median estimate of 15 analysts surveyed by Bloomberg News before today’s government report. Gasoline stockpiles may have declined 2 million barrels, the survey shows.
Prices also declined after a report showed confidence among U.S. consumers dropped more than forecast in March as fuel costs surged. The Conference Board’s confidence index fell to a three- month low of 63.4 from a revised 72 reading in February, figures from the New York-based private research group showed yesterday. The median forecast of 69 economists surveyed by Bloomberg News projected a drop to 65.
Deutsche Bank raised its 2011 Brent crude forecast by 16 percent to $117.50, according to an e-mailed report today by analysts including Michael Lewis and Soozhana Choi. Prices are reflecting a risk premium of $10 to $15 a barrel amid declining spare capacity in Saudi Arabia and unrest in the Middle East, according to the bank.
Libyan Violence
Oil in New York rose yesterday as troops loyal to Muammar Qaddafi dug in to block rebels advancing on his hometown of Sirte. Prices have climbed 23 percent since anti-government protests began Feb. 15 in Libya, cutting output in Africa’s third-largest producer by two-thirds.
“The more push-back we get from Qaddafi the more concerned that people will get,” Commodity Broking Services’ Barratt said. “The area is still an issue.”
Oil-shipping companies said they are maintaining normal services to Japan after the March 11 earthquake and tsunami.
Frontline Ltd., the world’s biggest operator of supertankers, said it will still travel to the ports of Tokyo Bay, judging the area to be safe for crew and vessels.
Nippon Yusen K.K., Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha Ltd. also said yesterday they were maintaining normal services to Japan and five of the six biggest container shippers are doing likewise. All ships are avoiding an exclusion zone around the crippled Fukushima nuclear plant 220 kilometers (135 miles) to the north of Tokyo.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
Where's the hysteria about rising gas prices? Pres. Obama? Big Oil? Conspiracy? Are they in bed together? Where's all the crying foul? You know if it were a pub in office, oh say like Pres Bush, that's exactly what you'd be hearing about on a daily basis. But, now that we have a Dem. in the office of the presidency you never here it mentioned and the mainstream media almost seem giddy about the rising cost of gas...???
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