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Oil Falls a Second Day on U.S. Stockpiles, China Imports

10 Apr 2012
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  • Oil dropped for a second day in New York as a decline in China’s fuel imports and speculation that U.S. crude stockpiles rose to the highest in 22 years raised concern of slowing global demand.

    Futures slid as much as 0.8 percent. U.S. inventories probably increased 2 million barrels to 364.4 million last week, the most for this time of year since 1990, according to a Bloomberg News survey before an Energy Department report tomorrow. China’s net crude imports fell 6 percent in March and overseas purchases of all goods missed economists’ estimates, customs data showed. The two nations are the world’s biggest oil consumers. Prices have gained this year on worry that tension with Iran will disrupt global supplies.

    “We are now between winter and summer with relatively low demand and high refinery maintenance,” Bjarne Schieldrop, Oslo-based chief commodity analyst at SEB AB, said today in an e-mailed response. Given the previous two weeks’ increases in U.S. stockpiles, “the market is likely to be cautious on the bull side with concern that we could see yet another strong rise tomorrow.”

    Oil for May delivery fell as much as 75 cents to $101.69 a barrel in electronic trading on the New York Mercantile Exchangeand was at $102.07 at 1:16 p.m. London time. The contract declined 85 cents yesterday to $102.46, the lowest close since April 4. Prices are up 3.5 percent this year.

    Brent crude for May settlement dropped $1.18, or 1 percent, to $121.49 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was $19.51, compared with $20.21 yesterday.

    China Imports

    China cut net crude imports in March before refineries start maintenance this quarter. Purchases fell to 5.52 million barrels a day from February’s record 5.87 million, according to Bloomberg calculations based on data released today on the website of the Beijing-based General Administration of Customs.

    The nation’s state-owned refiners plan “major” second-quarter maintenance, idling the equivalent of 12 percent of the country’s capacity, reported in January.

    China also reported a 5.3 percent increase in inbound shipments of all goods in March compared with a year earlier. That lagged behind the median estimate of 9 percent in a separate Bloomberg survey and 40 percent growth in February, indicating that domestic demand in the economy is slowing.

    Fuel Stockpiles

    U.S. gasoline supplies dropped 1.25 million barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg News before the Energy Department report. Inventories of distillates, a category that includes diesel and heating oil, were unchanged at 135.9 million, the survey showed.

    The American Petroleum Institute will release separate inventory data today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

    Oil slid yesterday after an April 6 Labor Department report that showed the U.S. created 120,000 jobs in March, missing the lowest forecast in a Bloomberg News survey of economists and compared with a median estimate of 205,000.

    Prices also dropped before negotiations between Iran and the United Nations Security Council members plus Germany resumed on April 14. The talks may ease concern that global crude supplies will be disrupted by a dispute over Iran’s nuclear program. The Islamic republic has threatened to close the Strait of Hormuz, a transit route for a fifth of the world’s oil, in response to a U.S. and European embargo.

    Kuwait Petroleum Corp. is considering alternative ways of exporting petroleum if the waterway is closed, including transporting oil to the United Arab Emirates, Chief Executive Officer Farouk al-Zanki said yesterday.

    Oil’s decline in New York may slow as prices near technical support along its 100-day moving average around $101.62 a barrel today, according to data compiled by Bloomberg. Futures yesterday dropped below this indicator before settling above it.