Oil Is Steady After Falling on Forecast of U.S. Stockpile Gain

By Christian Schmollinger

Nov. 19 (Bloomberg) -- Crude oil traded little changed in New York after falling yesterday on expectations U.S. inventories gained for an eighth week as fuel demand in the world's largest user declines.

Stockpiles probably climbed 1 million barrels in the week ended Nov. 14, according to the median of 12 analyst estimates before an Energy Department report today. Refinery output likely fell for a third week. U.S. gasoline purchases dropped 2.8 percent last week, the 30th consecutive decline, MasterCard Inc. said yesterday in its weekly SpendingPulse statement.

``The market is still very worried about consumption, leaving the price at a low level,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. ``The broad story in the report won't be changed. The key may not be so much the stock figures, but the demand figures within the report and that should show continued weakness.''

Crude oil for December delivery was at $54.47 a barrel, up 8 cents, at 12:54 p.m. Singapore time on the New York Mercantile Exchange. The December future expires tomorrow. The more active January contract was at $54.85 a barrel, up 9 cents.

Oil has dropped 63 percent since reaching a record $147.27 in July. Futures fell 56 cents, or 1 percent, to $54.39 a barrel yesterday, the lowest settlement since Jan. 29, 2007.

Prices rose earlier yesterday as a hijacked Saudi Arabian supertanker was anchored close to the Somali coast. Pirates directed the Sirius Star, the largest merchant ship ever seized, to the Eyl coastal area to the north of Somalia, the U.S. Navy said. The vessel is carrying 2 million barrels of crude oil.

``The effect on the price is marginal and it's been overshadowed by the demand side worries,'' said Commonwealth Bank's Moore.

China Slowdown

China's economy may grow by less than 9 percent in the fourth quarter of this year as overseas demand weakens, the China Securities Journal reported, citing People's Bank of China adviser Fan Gang.

The Asian nation's economic expansion may slip to below 8 percent next year before rebounding to between 8 and 9 percent in 2010, the Xinhua News Agency-affiliated newspaper said today, citing Fan's interview. The country is the world's second-biggest oil consumer.

Most Asian stocks fell today, led by commodity producers as oil and metals prices dropped. Woodside Petroleum Ltd., Australia's second-largest oil company, lost as much as 6.3 percent. Cnooc Ltd., China's biggest offshore explorer, fell 1.8 percent to HK$5.60.

U.S. Stockpiles

Refineries probably operated at 84.5 percent of capacity, down 0.1 percentage point from the week before, the survey showed. The plants used 87 percent of their capacity a year ago as they raised their output to produce heating fuels.

``Seasonally it is a time where demand for heating oil starts to pick up,'' said Toby Hassall, a research analyst with Commodity Warrants Australia in Sydney. ``But offsetting that is the economic slowdown which should mute any seasonal support.''

Analysts were split over whether gasoline stockpiles rose or fell last week. Supplies were probably unchanged from 198.1 million barrels the week before, according to the survey.

Supplies of distillate fuel, a category that includes heating oil and diesel, rose 600,000 barrels from 128.4 million barrels the week before, according to the survey.

The Energy Department is scheduled to release its weekly report today at 10:35 a.m. in Washington.

Brent crude oil for January settlement was at $51.90 a barrel, up 6 cents on London's ICE Futures Europe exchange at 12:55 p.m. in Singapore. The contract declined yesterday 47 cents, or 0.9 percent, to $51.84 a barrel, the lowest settlement since Jan. 18, 2007.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.