Oil Is Steady Before Report Forecast to Show Stockpiles Gained

By Christian Schmollinger and Grant Smith

Jan. 7 (Bloomberg) -- Crude oil traded little changed before a report forecast to show that crude inventories increased in the U.S. as its economy contracted.

U.S. crude oil stockpiles probably rose for a second week in the week ended Jan. 2, according to a Bloomberg News survey before an Energy Department report today. Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back on investments, according to data from the Commerce Department.

“We’ve seen over the last few months that the market has been really focused on demand,” said Gerard Burg, an energy economist at National Australia Bank Ltd. in Melbourne. “Anytime we get negative economic news out of the U.S. it puts a damper on the crude market.”

Oil for February delivery traded at $48.53, 5 cents lower, in electronic trading on the New York Mercantile Exchange as of 8:58 a.m. London time. It earlier fell as much as 97 cents, or 2 percent, to $47.61 a barrel.

U.S. crude oil stockpiles probably increased 900,000 barrels in the week ended Jan. 2, from 318.7 million the week before, according to the median forecast of 10 analysts surveyed by Bloomberg News.

Gasoline inventories rose 1 million barrels from 208.1 million, according to the survey. It would be the fifth consecutive weekly gain. Gasoline supplies have risen in 12 out of the past 14 weeks.

Falling Consumption

Supplies of distillate fuel, a category that includes heating oil and diesel, probably increased 1.1 million barrels from 136 million barrels. Refineries probably operated at 82.5 percent of capacity, unchanged from the week before, when they ran at the lowest since the period ended Oct. 10 because of damage caused by Hurricanes Gustav and Ike.

The Energy Department is scheduled to release its weekly report at 10:30 a.m. in Washington. The release time will change this week from 10:35 a.m. previously.

U.S. gasoline consumption fell 3.5 percent last week to a two-month low as the U.S. recession reduced demand, a MasterCard Inc. report showed.

Motorists bought an average 8.97 million barrels of gasoline a day in the week ended Jan. 2, down from 9.299 million a year earlier and the lowest since early November, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report yesterday.

Slowing Economy

The U.S. Federal Reserve released minutes of a meeting of policy makers last month that showed they believed “risks to the economy would be substantial.”

U.S. factory orders fell 4.6 percent in November after a revised 6 percent decrease in October that was larger than previously estimated, the Commerce Department said in Washington. The back-to-back decline was the biggest since records began in 1992.

Brent crude oil for February settlement rose as much as 40 cents, or 0.8 percent, to $50.93 a barrel on London’s ICE Futures Europe exchange.

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