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Heating Oil Futures: Crude Oil Reverses Decline on Chinese Equities' Gain, Rising Fuel Demand
 July 27th, 2010
Heating oil futures and crude declined for a second day in New York after an industry report showed U.S. crude inventories rose and an index of consumer confidence fell more than forecast, bolstering speculation that growth and energy demand may falter.
Oil dropped the most in more than three weeks yesterday as the Conference Board’s sentiment index declined to 50.4 for July, the lowest in five months. Crude supplies increased 3.1 million barrels last week, the most in five weeks, according to the industry-funded American Petroleum Institute.
“Sentiment really hasn’t improved,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone. “There was a sell-off in the crude market because of a fall in U.S. consumer confidence. The fundamentals are still weak.”
Crude for September delivery dropped as much as 62 cents, or 0.8 percent, to $76.88 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.30 at 12:55 p.m. Singapore time. Yesterday, the contract fell $1.48, or 1.9 percent, to $77.50. Futures have declined 2.6 percent this year.
The confidence gauge from the Conference Board, a New York- based private research group, showed American consumers were shaken by concerns over jobs and wages that threaten to constrain the economic recovery. It was forecast to fall to 51, based on the median estimate from economists surveyed by Bloomberg News.
Heating Oil SuppliesU.S. crude inventories rose to 356.3 million barrels in the week ended July 23, the highest in four weeks, according to the American Petroleum Institute report.
Gasoline stockpiles climbed 877,000 barrels to 222.3 million, a four-month high. Distillate fuel supplies, including heating oil and diesel gained for the ninth time in 10 weeks, adding 407,000 barrels to 162.3 million, the report showed. That’s the highest since the week to Jan. 15.
An Energy Department report today may show oil inventories dropped to a four-month low, according to a Bloomberg News survey. Commercially held stockpiles probably fell 1.73 million barrels from 353.5 million, based on the median estimate from 16 analysts. Gasoline and distillate supplies are expected to have increased.
Brent crude for September settlement on the London-based ICE Futures Europe exchange fell as much as 44 cents, or 0.6 percent, to $75.69 a barrel. It was at $76 at 12:44 p.m. Singapore time. Yesterday, the contract declined $1.37, or 1.8 percent, to settle at $76.13.
West Texas PremiumWest Texas oil traded in New York is at a premium of $1.30 a barrel to Brent today, up from a 66-cent difference a month ago. Support for the U.S. grade has come as a pipeline carrying Canadian supplies south was shut after a leak.
Enbridge Energy Partners LP’s Lakehead System spilled 19,500 barrels of crude from its Line 6B into the Kalamazoo River in southern Michigan July 26, the company said yesterday. The 30-inch pipeline can transport 190,000 barrels a day of light synthetics and heavy and medium crude to Sarnia, Ontario, from Griffith, Indiana.
U.S. gasoline demand rose 1.7 percent last week as motorists bought an average of 9.51 million barrels a day of the motor fuel, MasterCard Inc. said in its SpendingPulse report yesterday. That’s the sixth gain in seven weeks.
- Ben Sharples in Melbourne and Christian Schmollinger in Singapore at Bloomberg.
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