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Oil Trades Near One-Week Low on European Crisis Concern, U.S. Stockpiles

22 Nov 2011

Oil traded near the lowest price in more than a week in New York as investors speculated that stockpiles are rising in the U.S. and European demand will fall.

Futures swung between gains and losses after dropping yesterday for a third day. Growth in Germany, Europe’s largest economy, may slow next year, the Bundesbank said. A U.S. Energy Department report tomorrow may show oil and fuel supplies increased last week, according to a Bloomberg News survey. Saudi Arabian Oil Co. Chief Executive Officer Khalid Al-Falih said the world economy is at risk of a double-dip recession.

“Consumption in the U.S. is still very subdued,” saidDavid Lennox, a resource analyst at Fat Prophets in Sydney who forecast oil may trade as low as $80 a barrel. “Any economic slowdown in Europe impacts on crude demand.”

Crude oil for January delivery was at $97.06 a barrel, up 14 cents, in electronic trading on the New York Mercantile at 2:17 p.m. in Singapore. The contract slipped 75 cents yesterday to $96.92, the lowest settlement since Nov. 9. Front-month prices are 19 percent higher than a year ago.

Brent oil for January settlement was at $107.43 a barrel, up 55 cents, on the London-based ICE Futures Europe exchange. The European contract’s premium to West Texas crude was at $10.33. The spread reached a record high of $27.88 on Oct. 14.

Crude Stockpiles

Hedge-funds and other money managers cut net-long positions on Brent by 647 contracts, or 1 percent, in the week ended Nov. 15, London-based ICE Futures Europe said yesterday in its weekly Commitment of Traders report.

Oil may extend losses in New York after the moving-average convergence/divergence indicator fell below its signal line for the first time since Oct. 6, according to data compiled by Bloomberg. Investors tend to sell contracts on a so-called bearish MACD crossover. Futures have technical support along the 200-day moving average, or $95.40 a barrel today. That’s close to where yesterday’s decline halted.

U.S. crude inventories rose 950,000 barrels last week, according to the median of eight analyst estimates in a Bloomberg survey before the Energy Department report. Gasoline supplies climbed 1.1 million barrels, the survey shows.

The American Petroleum Institute will release its own inventory report 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.

Cushing Supplies

Crude oil inventories in Cushing, Oklahoma, rose 0.8 percent on Nov. 17 from Nov. 15, according to data compiled by DigitalGlobe Inc. Stockpiles held in floating-roof tanks at the hub gained 224,000 barrels to 28.3 million, satellite images taken by the Longmont, Colorado-based company show.

Cushing is the physical delivery point for Nymex oil-futures contracts and the largest crude-trading and storage hub in the U.S.

Iran’s governor to OPEC said global oil markets are “in balance,” signaling the country is moving closer to Saudi Arabia on its view of crude prices three weeks before the group meets in Vienna. Mohammad Ali Khatibi said in Riyadh yesterday that he foresees a “positive” Organization of Petroleum Exporting Countries meeting next month.