Crude Oil Falls a Third Day as Swine Flu May Derail Economies

By Christian Schmollinger

April 29 (Bloomberg) -- Crude oil fell for a third day on concern that fuel demand will drop as the swine-flu outbreak delays a recovery from the global recession and after a report showed U.S. stockpiles climbed to an 18-year high.

Oil and gold fell as swine flu cases expanded in New York City and equities declined on speculation that banks including Citigroup Inc. may need more capital. The industry-funded American Petroleum Institute said yesterday crude stockpiles rose 4.58 million barrels to the most since August 1990. The U.S. Energy Department’s supply report will be out later today.

“I’m really surprised that we’re not lower with the swine- flu and the news on Citi,” said Jonathan Kornafel, a director for Asia at options traders Hudson Capital Energy in Singapore. “How long can the supply and demand figures be ignored? There is a lot of downward pressure on commodity and equity markets.”

Crude oil for June delivery fell as much as 80 cents, or 1.6 percent, to $49.12 a barrel in electronic trading on the New York Mercantile Exchange. It was at $49.21 a barrel at 10:27 a.m. Singapore time. The contract fell 22 cents to settle at $49.92 a barrel yesterday. Prices are up 12 percent this year.

The World Health Organization yesterday raised its global pandemic alert to the highest since the warning system was adopted in 2005, saying the disease is not containable.

The concerns about swine-flu’s effects on the global economy caused commodities including copper and gold to drop yesterday, with the Reuters/Jefferies CRB Index of 19 commodities declining 0.97 point, or 0.4 percent, to 217.22.

Commodities Drop

Bullion for immediate delivery lost as much as 0.6 percent to $887.96 an ounce, and was at $889.35 at 8:56 a.m. in Singapore, down 2.6 percent this week. Copper for three-month delivery on the London Metal Exchange stood at $4,187 a metric ton at 10:03 a.m. Singapore time.

Brent crude for June settlement fell as much as 74 cents, or 1.5 percent, to $49.25 a barrel and was at $49.36 at 10:30 a.m. Singapore time on London’s ICE Futures Europe exchange. It fell 33 cents, or 0.7 percent, to end the session at $49.99 a barrel yesterday.

An Energy Department report later today will probably show that U.S. crude oil stockpiles rose by 1.8 million barrels last week, according to the median of 14 analyst responses in a Bloomberg News survey. Supplies climbed to 370.6 million barrels in the week ended April 17, the highest since September 1990.

The API report, released after the end of floor trading yesterday, showed supplies rose to 374.8 million last week.

Gasoline stockpiles increased 200,000 barrels from 217.3 million the prior week, according to the Bloomberg survey. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 1 million barrels from 142.3 million.

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