Arab Today, arab today oil rebounds from bigges drop in 3 months
Last Updated : GMT 05:25:49
Arab Today, arab today
Arab Today, arab today

Oil rebounds from bigges drop in 3 Months

Arab Today, arab today

Arab Today, arab today Oil rebounds from bigges drop in 3 Months

New York - Arabstoday

Oil rebounded from the largest decline in three months in New York after an industry report showed crude stockpiles fell in the U.S, the world’s biggest consumer of the commodity. Futures gained as much as 0.7 percent, recovering from a 2.3 percent drop yesterday after Saudi Arabia’s Oil Minister Ali al-Naimi said his country can increase output by 25 percent immediately if necessary. U.S. crude inventories shrank 1.4 million barrels last week, the most in six weeks, according to the American Petroleum Institute. A Bloomberg News survey indicated that today’s Energy Department may show stockpiles climbed 2.2 million barrels. “The API data showed a surprising draw on the crude inventories,” said Michael Poulsen, an analyst at Middelfart, Denmark-based Global Risk Management. “If these numbers are confirmed by the Energy Department, it would be a bullish factor for crude prices.” Crude for May delivery rose as much as 79 cents to $106.86 a barrel in electronic trading on the New York Mercantile Exchange. It was at $106.43 at 12:20 p.m. London time. The contract dropped $2.49 yesterday to $106.07, the lowest close since March 15. The April future, which expired, fell $2.48 to $105.61. Front-month prices are up 7.7 percent this year. Brent oil for May settlement on the London-based ICE Futures Europe exchange increased as much as 0.5 percent to $124.70 a barrel. The European benchmark contract was at a premium of $17.90 to New York futures, compared with $18.05 yesterday, when it widened for the first time in four days. Gasoline Stockpiles U.S. gasoline stockpiles decreased 2 million barrels in the week ended March 16, according to the median estimate of 11 analysts surveyed by Bloomberg News. Yesterday, the API said supplies slid 1.4 million barrels. The Energy Department will release its weekly report at 10:30 a.m. in Washington. Commercially held crude inventories in China, the second- largest oil consumer, fell 3.8 percent in February, according to a newsletter published by the official Xinhua News agency. That’s about 12.5 million metric tons, Bloomberg calculations showed. Supplies were down for the fourth time in five months. Brent crude rallied 11 percent last month, the most in a year, on concern European Union and U.S. sanctions against Iran’s nuclear program will disrupt oil exports from the Middle East. Iranian output slipped 45,000 barrels to 3.45 million barrels a day in February, according to a Bloomberg survey of analysts and producers. The Persian Gulf nation has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil supplies, in response to an embargo. Technical Support Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $105.21 a barrel today, according to data compiled by Bloomberg. Futures halted yesterday’s decline near this indicator. Buy orders tend to be clustered near chart-support levels. “Oil rebounded off of the $105 support level,” said Ken Hasegawa, a commodities-derivatives sales manager at Newedge Group in Tokyo. Saudi Arabia has the capacity to produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April, al-Naimi told reporters yesterday in Doha. There is no shortage of supply and the kingdom has excess capacity of 2.5 million barrels a day, which makes up the bulk of spare capacity in the Organization for Petroleum Exporting Countries, he said. ‘Supply is Flush’ “We agree wholeheartedly with al-Naimi’s assertions that supply is flush relative to 2008,” when oil reached a record high, Stephen Schork, president of the Schork Group in Villanova, Pennsylvania, said in a note e-mailed today. “Unfortunately, this is a market that can remain irrational, or at least rational on irrelevant criteria, longer than investors can remain solvent and thus we maintain our bullish biases.” ICE Futures Europe will set interval price limits, or “circuit breakers,” on crude, gasoil and gasoline contracts from April 1 to prevent large, fast moves, the exchange said in a statement yesterday. Brent and West Texas Intermediate crude price movements will be limited to $1.25 per 3 seconds. Gasoil price swings will be capped at $10. Gasoline and heating oil moves will be limited to 3 cents per 3-second period, it said. “Circuit breakers are all well and good, but right now in the Brent market I’m not sure there’s a need,” said Michael Hewson, an analyst at CMC Markets in London, which handles about $240 million a day in U.S. crude contracts. “They could be announcing this if they were concerned about sharp moves in the price, but that hasn’t happened yet. Brent hasn’t been displaying spikey tendencies.”

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