By Yee Kai Pin and Ben Sharples
Sept. 3 (Bloomberg) -- Oil traded above $68 a barrel in New York after inventories declined in the U.S., signaling a recovery in fuel consumption in the world’s largest economy.
U.S. gasoline stockpiles fell to an 11-week low even as refinery output increased, according to an Energy Department report yesterday. This was more than three times analysts’ estimates in a Bloomberg survey.
“U.S. oil demand has reached a turning point, with demand indications now likely to turn increasingly positive over the rest of the year,” commodities analysts at Barclays Capital, led by Paul Horsnell, said in a report. “Gasoline demand patterns seem to have been a reasonably good indicator, almost a leading indicator, as to the timing of the U.S. recession.”
Crude oil for October delivery traded at $68.51 a barrel, up 46 cents, on the New York Mercantile Exchange at 2:43 p.m. in Singapore. Yesterday, the contract settled unchanged at $68.05, the first time this has happened since Nov. 24, 2006. Prices have gained 54 percent this year.
U.S. fuel consumption averaged 19.3 million barrels a day in the four weeks ended Aug. 28, up 0.1 percent from a year earlier, the Energy Department said. Gasoline inventories tumbled 2.97 million barrels from a week earlier to 205.1 million. Refineries produced 9.2 million barrels a day of the motor fuel, the highest in six weeks.
Market Cue
“We look to the emergence of better demand indications to provide the main market cue in coming weeks,” Horsnell said. “In particular, we see those positive signals as key in building the base for the eventual break above $75 per barrel.”
Factories in the U.S. expanded in August for the first time in 19 months, an Institute for Supply Management gauge showed Sept. 1. China’s Purchasing Managers’ Index rose to a seasonally adjusted 54 from 53.3 in July, the Federation of Logistics and Purchasing said Sept. 1.
“Over the past week we have seen some positive data,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “There is evidence that China is on a strong growth path and that activity in other developed economies is at least stabilizing.”
The Organization of Petroleum Exporting Countries will probably maintain its output targets at a policy meeting Sept. 9 in Vienna, according to the group’s president.
“The world economy is recovering,” Jose Maria Botelho de Vasconcelos, who is also Angola’s oil minister, said in an interview in Luanda yesterday. “Everything shows that they will keep output unchanged.”
OPEC Output
The 12-member group, which pumps 40 percent of the world’s oil, hasn’t officially increased output since pledging a series of reductions up to December.
Saudi Arabia, the largest OPEC member, yesterday raised its crude oil official selling prices for all grades to be supplied in October to Asia and Northwest Europe. Asia is the kingdom’s biggest export market.
Brent crude oil for October settlement traded at $67.94 a barrel, up 28 cents, on the London-based ICE Futures Europe exchange at 2:44 p.m. Singapore time. Yesterday, the contract declined 7 cents to $67.66, the lowest settlement since July 29.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
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