Crude Oil Falls a Second Day on Report of Surging U.S. Supplies
Crude Oil Falls a Second Day on Report of Surging U.S. Supplies
Nov. 10 (Bloomberg) -- Crude oil fell for a second day in New York after a report yesterday showed U.S. inventories rose more than analysts expected because imports gained and producers in the Gulf of Mexico restored platforms shut by storm damage.
Oil supplies climbed 4.4 million barrels to 323.6 million, the highest since the week ended July 1, and twice the gain expected, according to the median forecast of a Bloomberg survey of 13 analysts. Daily output in the Gulf of Mexico jumped 36,000 barrels the past two days, according to the government.
``These guys are just ramping up output so fast,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``We're going to get bigger builds and prices are going lower from here.''
Crude oil for December delivery fell as much as 57 cents, or 1 percent, to $58.36 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $58.43 at 10:35 a.m. in Sydney, 20 percent higher than a year ago.
The contract yesterday fell 78 cents, or 1.3 percent, to $58.93, the lowest close since July 22. Futures have declined 18 percent since reaching a record $70.85 on Aug. 30, the day after Hurricane Katrina wrecked rigs in the Gulf of Mexico and made landfall.
Prices rebounded $1.80 yesterday after touching $58.60, matching the previous 15-week low reached on Nov. 7. Crude oil for January delivery was at $59.21 in after-hours trading.
``We're also rolling out of December into January'' contracts, which is slowing the slide in prices, Excel's Waggoner said.
Support
The December contract is at its lowest since July 21, when it fell as low as $58.30.
``Fifty-eight dollars is an important level,'' said Jordan Kotick, head of technical analysis at Barclays Capital Inc. in New York. ``If you get below $58, it will probably run to the low to mid-$50's area. That is where you should start to change your thinking and move back to the upside.''
Crude oil, heating oil and gasoline futures jumped to all- time highs after Katrina struck the U.S. Gulf Coast in August. Gasoline and diesel pump prices also touched records in the wake of Katrina and Hurricane Rita a month later.
Daily Gulf oil production rose another 1,481 barrels according to a daily report by the U.S. Minerals Management Service yesterday. Output still closed because of the storms totals 737,136 barrels a day, or 49 percent of the region's total, the service said.
Gasoline Supplies
Gasoline inventories surged 4.2 million barrels to 201.1 million, the highest since the week ended Aug. 5, and more than three-times the gain expected in the analyst survey. Supplies are up 3.2 million barrels, or 1.6 percent, from the five-year average for the date, the Energy Department said yesterday in a report.
Boone Pickens, the Dallas hedge fund manager who predicted more than a year ago that oil would go above $60 a barrel, has turned bearish and said yesterday prices should head toward $50 in coming months as the economy slows, crimping demand.
Prices may reach $56, the July low, before cooler temperatures around end of the month start boosting heating demand, Excel's Waggoner said.
``I don't think it's going to go much lower than that,'' he said. ``We're going to start seeing draws on heating oil and diesel soon.''
Heating oil contracts rose for the first day in four yesterday after the Energy Department said stockpiles of distillate, a category that includes heating oil and diesel, fell 84,000 barrels to 120.8 million. Analysts expected a gain of 750,000 barrels. Distillate supplies were 2.6 percent below the five-year average for the week, the department said.
Heating oil for December delivery fell 1.41 cents, or 0.8 percent, to $1.7755 a gallon in after-hours trading. It jumped 1.11 cents, or 0.6 percent, to $1.7896 yesterday.
Home-heating demand in the Northeast, which accounts for 80 percent of U.S. heating oil consumption, will be 7 percent below normal through Nov. 16, Weather Derivatives, a forecaster in Belton, Missouri, said yesterday.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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