Oil Little Changed After Rising to Five-Week High on Equities

By Grant Smith

Aug. 6 (Bloomberg) -- Oil traded little changed in New York after rising equity markets pushed prices to a five-week high while a report showed crude inventories swelled in the U.S., the world’s largest energy user.

Oil in New York advanced earlier today to its highest since June 30, and Brent crude in London reached a high for this year as stock markets in Europe and Asia rose on better-than-expected earnings. The U.S. Energy Department reported that crude stockpiles grew more than forecast last week as refinery utilization fell to its lowest in more than two months.

“The market doesn’t care about fundamentals,” said Eugen Weinberg, an analyst a Commerzbank AG in Frankfurt. “Equities, the dollar, low risk aversion and strong price momentum are enough to push prices higher. We might see a spike to $80 and a massive fall in the direction of $50 thereafter.”

Crude oil for September delivery rose as much as 45 cents, or 0.6 percent, to $72.42 a barrel on the New York Mercantile Exchange, and traded at $71.76 at 10:49 a.m. London time. Prices have gained 61 percent this year.

Brent crude oil for September settlement traded for $75.31 a barrel at 10:48 a.m. local time on London’s ICE Futures Europe exchange. It peaked earlier at $76 a barrel, the highest since Oct. 14.

Brent is trading at a premium of more than $3 to the West Texas Intermediate oil contract traded on Nymex. Crude stockpiles at Cushing, Oklahoma, the delivery point for New York futures, climbed to 33.3 million barrels, the highest since the week of March 13, according to the Energy Department.

Stockpiles Depressing WTI

“Cushing inventories are depressing WTI relative to Brent,” analysts from Barclays Capital said in a report yesterday. “The market sees the slack narrowing consistently and is pricing the WTI curve accordingly.”

The West Texas future for September delivery is trading at a discount of $2.01 a barrel to October. That’s the largest spread, or price difference, between the front-month and second- month contract since April 21.

Crude-oil stockpiles climbed 1.67 million barrels to 349.5 million last week, according to the Energy Department report. A 600,000-barrel gain was forecast, according to analysts in a Bloomberg News survey conducted before the report’s release.

U.S. supplies of distillate fuel, a category that includes heating oil and diesel, fell by 1.14 million barrels to 161.5 million, the Energy Department report said. Inventories were projected to increase 1.23 million barrels, according to the median of 16 responses by analysts in the Bloomberg survey.

Highest Since February

Fuel demand climbed 3.1 percent to 19.3 million barrels a day last week, the highest since February. About four-fifths of that gain came under the “other oils” category that includes natural gas liquids such as butane and liquefied refinery gases.

Gasoline inventories declined 218,000 barrels to 212.9 million last week, the report showed. An 800,000-barrel drop was forecast in the survey.

The Organization of Petroleum Exporting Countries may decide to maintain current output levels when it meets next month in Vienna, Kuwaiti Oil Minister Sheikh Ahmed Abdullah al- Sabah was cited as saying by state-run KUNA news agency today.

OPEC agreed at three meetings last year that members with quotas would cut output by a combined 4.2 million barrels a day to 24.845 million in a bid to bolster prices. The group is scheduled to discuss production levels in Vienna on Sept. 9 after leaving output unchanged at two meetings this year.

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