Crude Oil Is Steady Near $145 as Brazil's Supply Is Disrupted

By Nesa Subrahmaniyan

July 15 (Bloomberg) -- Crude oil traded little changed near $145 a barrel in New York as production in Brazil was disrupted after a strike by employees of state oil company Petroleo Brasileiro SA.

Oil rose as high as $146.37 a barrel yesterday as employees of Petrobras began a five-day strike in an area home to more than 80 percent of the country's output. At 5 a.m. Singapore time output was 63,000 barrels a day below full capacity, Petrobras said in an e-mailed statement.

``It's just another supply problem the world doesn't need now,'' said Anthony Nunan, Tokyo-based assistant general manager for risk management at Mitsubishi Corp. ``Supply issues are keeping the market buoyant.''

Crude oil for August delivery fell 25 cents to $144.93 a barrel at 1:47 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. Yesterday, it rose 10 cents to settle at $145.18 a barrel. Futures reached a record $147.27 a barrel on July 11 and have risen 96 percent in the past year.

Petrobras has lost about 400,000 barrels a day of output because of the strike in the Campos Basin, the source of about 82 percent of Brazil's production of 1.8 million barrels a day, the country's main oil union said yesterday. The company said it is pumping crude from all but two of 38 offshore platforms affected by the strike.

Petrobras exports some of the heavy crude oil from Campos because its refineries aren't fully equipped to handle these grades. It uses the proceeds to buy lighter oil from abroad.

Iran Standoff

Crude oil may trade above $140 a barrel amid ``ongoing tensions in the Middle East'' as Iran defies United Nations efforts to halt its nuclear program, said David Moore, commodity strategist at Commonwealth Bank Australia in Sydney.

Israeli war planes have practiced over Iraq for an attack on Iran's nuclear research facility, according to the Jerusalem Post. Iran as part of war games test-fired missiles capable of reaching Israel, according to state media reports.

Iran, the Middle East's second-biggest producer, said yesterday it will reject any proposal to halt its nuclear program that might be offered at a weekend European Union summit, the Associated Press reported.

The meeting in Geneva will instead focus on ``common'' points, Iranian President Mahmoud Ahmadinejad said on state television, according to AP.

Saeed Jalili, Iran's top nuclear negotiator, will meet with EU foreign policy chief Javier Solana on July 19 in the Swiss city, AP said.

Dollar Weakens

The dollar fell against the yen and euro on speculation Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson will tell lawmakers credit-market losses will weigh on U.S. economic growth.

The dollar declined to 105.86 yen as of 12:37 p.m. in Singapore from 106.14 yen in New York yesterday. It weakened to $1.5942 per euro from $1.5908. It fell to within a cent of the record low of $1.6019 reached April 22.

U.S. crude-oil supplies probably fell as record prices discouraged buying by refiners, according to a Bloomberg News survey of analysts.

Supplies of crude declined 2 million barrels in the week ended July 11 from 293.9 million, according to the median of responses by six analysts before an Energy Department report July 16. Four forecast a drop, and two expected a gain. Supplies fell 5.84 million barrels in last week's report, double the forecast.

Gasoline stockpiles probably gained 500,000 barrels from 211.8 million barrels the week before, the survey showed. Four analysts predicted a rise and two a decline.

Inventories of distillate fuel, including heating oil and diesel, probably rose 2 million barrels from 122.5 million barrels the week before. All the analysts predicted an increase.

Refineries probably operated at 89.3 percent of capacity, up 0.1 percentage point from the week before, the survey showed.

Atlantic Storm

Tropical Storm Bertha lashed Bermuda with rain and threatened to strengthen into a hurricane as it moved away from the islands. In the Pacific, Hurricane Elida was forecast to weaken off Mexico's west coast.

Bertha, with maximum sustained winds of almost 70 miles (110 kilometers) per hour, was about 120 miles north-northeast of Bermuda, the National Hurricane Center said in an advisory issued at 11 p.m. New York time yesterday. As much as 2 inches of rain may fall on the islands in coming days, while ``large swells and high surf'' are forecast to decrease.

Bertha may strengthen into a hurricane today as it moves north-northeast at almost 9 miles per hour, the Miami-based center said. A storm becomes a hurricane when winds reach 74 miles per hour.

Brent crude oil for August settlement fell 1 cent to $143.91 a barrel at 1:37 p.m. Singapore time on London's ICE Futures Europe exchange. The August contract, which expires tomorrow, reached a record $147.50 on July 11. The more-widely held September contract fell 8 cents to $145.25 a barrel.

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net