Home » Commodity » Oil traded near the lowest in more than a week as tensions in Egypt eased and rising stockpiles in the U.S

Monday, February 7, 2011

Oil traded near the lowest in more than a week as tensions in Egypt eased and rising stockpiles in the U.S

Oil traded near the lowest in more than a week as tensions in Egypt eased and rising stockpiles in the U.S. signaled fuel demand may be faltering in the world’s biggest crude consumer.

Investors should consider selling bullish oil positions as the Egyptian crisis subsides, according to JPMorgan Chase & Co. Futures slid 1.7 percent yesterday amid government talks with the opposition. U.S. crude inventories probably rose for a fourth week, a Bloomberg News survey showed before an Energy Department report. Supplies at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, are at the highest since at least 2004.

“The reason for the moderation, especially with WTI, is the continued high stocks at Cushing, coupled with the fact that some of the geopolitical unrest in Egypt seems to be abating,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne.

The March contract was at $87.46 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 11:03 a.m. Singapore time. Yesterday, it closed at $87.48, the lowest since Jan. 27. Prices declined 5.1 percent in the five days ended Feb. 7 and are up 22 percent the past year.

Brent crude for March settlement was at $99.23 a barrel, down 2 cents, on the London-based ICE Futures Europe exchange. The contract settled at $99.25 yesterday, down 0.6 percent.

U.S. crude supplies gained 2.25 million barrels from 343.2 million in the seven days ended Feb. 4, the Bloomberg News survey showed before tomorrow’s report. The industry-funded American Petroleum Institute will publish its own data today.

Fuel Inventories

Gasoline inventories probably climbed to the highest level in almost 21 years, according to the survey. Supplies of the motor fuel increased 3 million barrels, or 1.3 percent, from 236.2 million a week earlier, according to the median of 10 analyst estimates. The projected advance would leave stockpiles at the highest since March 1990.

Oil in New York surged to $92.19 on Jan. 31, the highest settlement since Oct. 3, 2008, on concern Egyptian unrest would disrupt shipments from the Middle East. Brent futures climbed above $100 a barrel, reaching at $102.34 on Feb. 2, the highest since Sept. 26, 2008.

About 2.5 percent of global oil production moves through Egypt via the Suez Canal and the Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc.

Egypt’s government has promised progress within a month toward free elections, a move intended to persuade protesters to leave Cairo’s Tahrir Square after two weeks of rallies aimed at toppling President Hosni Mubarak.

Sell Longs

Oil investors should consider taking profit from long positions because prices may decline this week without fresh political tensions in North Africa and the Middle East, JPMorgan Chase & Co. said in a report yesterday.

“We haven’t heard any news about the Suez Canal being impeded,” National Australia Bank’s Westmore said. “It’s still one to watch, it’ll be on the minds of market participants, but it seems that some of the risks have lessened around those supply constraints.” For the latest updates PRESS CTR + D or visit Stock Market news Today

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