Oil Falls as U.S. Supplies May Have Gained, China Imports Drop

By Grant Smith and Christian Schmollinger

March 11 (Bloomberg) -- Crude oil fell for a second day amid speculation a government report today will show U.S. inventories gained as demand weakened.

The Energy Department may say supplies rose 250,000 barrels last week, according to the median of 14 analyst responses in a Bloomberg News survey. China, the world’s second-biggest energy user, cut net crude-oil imports to the lowest in at least two years in February as a slowing economy caused refiners to reduce purchases.

“The market is caught right now between concerns over the decline in demand, and the prospect of another reduction in OPEC production levels,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “Things are quiet ahead of this afternoon’s figures.”

Crude oil for April delivery fell as much as 61 cents, or 1.3 percent, to $45.10 a barrel on the New York Mercantile Exchange, trading for $45.33 at 9:06 a.m. London time. Yesterday, futures fell $1.36 to $45.71 a barrel. Prices are up 1.6 percent so far this year.

China’s crude oil purchases dropped to 11.73 million metric tons, the customs bureau said on its Web site today. For the first two months of the year, imports fell 13 percent to 24.55 million tons, or 3.12 million barrels a day.

U.S. Stockpiles

An U.S. inventory gain today would be the 20th in 24 weeks. The Energy Department will release its weekly report at 10:30 a.m. in Washington.

The industry-funded American Petroleum Institute said supplies fell 419,000 barrels to 345.3 million barrels last week, in a report released yesterday after the close of trading.

Oil-supply totals from the API and DOE moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.

Brent crude oil for April settlement fell as much as 51 cents, or 1.2 percent, to $43.45 a barrel on London’s ICE Futures Europe exchange, and traded at $43.91 a barrel at 9:02 a.m. London time.

The Organization of Petroleum Exporting Countries, which will meet in Vienna on March 15, has reduced output three times since September.

OPEC must comply fully with existing reduction agreements before making new ones, Qatar’s oil minister said. Saudi Arabia wants OPEC to comply with its output ceiling and opposes a further curtailment in production, Al-Hayat newspaper reported, citing an unidentified person.

‘Perception of Uncertainty’

“There is a perception of uncertainty around what OPEC will do and that may be a factor taking the edge off the oil price,” said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. “If OPEC says they’ll leave output unchanged, that will be a negative for the oil price, because people are worried about the strength in demand and inventories seem reasonably high.”

A gain in U.S. inventories in today’s report would add to stockpiles of 350.6 million barrels, near their highest level since July 2007.

Gasoline stockpiles probably dropped 1 million barrels in the week ended March 6 from 215.5 million the week before, according to the Bloomberg News survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 200,000 barrels.

Refineries probably operated at 83.1 percent of capacity, unchanged from the week before, according to the median of responses in the survey. U.S. refineries often shut units for maintenance during the first quarter as attention shifts away from heating oil and before gasoline use rises.

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