Oil Little Changed Before Report Forecast to Show Supply Gain

By Grant Smith and Christian Schmolllinger

Feb. 4 (Bloomberg) -- Oil traded little changed before a report forecast to show that inventories rose in the world’s largest energy user as the economic slump curbs demand.

U.S. crude-oil stockpiles increased 3 million barrels last week, according to a Bloomberg News survey. Yesterday, the industry-funded American Petroleum Institute reported a rise of more than 8 million barrels. U.S. companies probably eliminated 535,000 jobs in January, an ADP Employer Services report may show today.

“Inventories are expected to rise and a larger-than- expected build could weigh on the market,” said Andrey Kryuchenkov, an analyst with VTB Capital in London.

Crude oil for March delivery traded for $40.94 a barrel, 16 cents higher, on the New York Mercantile Exchange at 10:14 a.m. London time. Futures are down 8.9 percent this year and 55 percent from a year ago.

OPEC, supplier of more than 40 percent of the world’s oil, may not need to reduce output when it meets next month because crude prices are “firming up,” Libya’s top oil official said.

“A cut may be not necessary,” Shokri Ghanem, the chairman of Libya’s National Oil Corp, said in a phone interview from Tripoli today, commenting on a meeting that the Organization of Petroleum Exporting Countries plans to hold on March 15 in Vienna to review output levels.

The Energy Department is scheduled to release its weekly petroleum supply report at 10:30 a.m. today in Washington.

Petroleum Institute

The American Petroleum Institute reported that U.S. supplies rose 8.13 million barrels to 346.2 million last week. The API published its weekly report on oil inventories at 4:30 p.m. in Washington yesterday.

The API moved the release of its inventory data to Tuesday afternoons beginning last week. It had been issuing its reports on Wednesdays since 2003 to coincide with supply totals released by the government.

The price of oil for delivery next January is 32 percent more than for the current month, increasing the opportunity for traders to profit from storing crude for later use. This structure, in which a future month’s price is higher than the one before it, is known as contango.

Brent crude oil for March settlement was at $44.20 a barrel, up 12 cents, on London’s ICE Futures Europe exchange at 10:14 a.m. London time. The contract gained 26 cents, or 0.6 percent, yesterday to end the session at $44.08 a barrel.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net