Oil Little Changed Around $75 Before Report on U.S. Inventories

By Grant Smith

Jan. 27 (Bloomberg) -- Crude oil was little changed around $75 a barrel before a report forecast to show crude inventories increased in the U.S., the world’s largest energy user.

Oil has dropped 11 percent from a 15-month high on Jan. 11 amid concern that the U.S. government may limit trading by banks and that China will take further steps to cool its economy. The Energy Department will likely say crude stockpiles climbed 1.5 million barrels last week as refinery throughput dropped, according to a Bloomberg survey before the report today.

“Market sentiment is negative at the moment,” said Tobias Merath, head of commodities research at Credit Suisse Group AG in Zurich. “Falling refinery utilization is in itself a negative sign as it reduces consumption of crude oil. Talk about Chinese monetary tightening, proposed banking regulation, has affected risk appetite.”

Crude oil for March delivery traded at $74.84 a barrel, 13 cents higher, in electronic trading on the New York Mercantile Exchange at 1:15 p.m. London time. Yesterday, the contract dropped 55 cents to settle at $74.71.

U.S. refining rates, already at their lowest level outside the Atlantic hurricane season since at least 1989, probably fell 0.1 percentage point, according to Bloomberg’s survey. Distillate stockpiles, which include heating oil and diesel, may have dropped by 1.8 million barrels, the survey said.

Oil stockpiles probably climbed from 330.6 million barrels in the prior week, according to the median of 18 analyst estimates in Bloomberg’s survey.

API Data

If the Energy Department numbers follow the forecasts, that would be counter to American Petroleum Institute data that were released late yesterday. Inventories of crude fell by 2.23 million barrels last week to 326.1 million, the industry group said. Distillate fuel supplies dropped 1.98 million barrels.

Gasoline supplies rose 916,000 barrels to 228.5 million barrels, the highest since March 1999, the API said.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. 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.

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

The dollar rose against the euro as investors sold the European currency on concern fiscal deficits in the region will grow. The dollar climbed to $1.4022 to the euro, the strongest since July 30.

Waning Demand

Crude also dropped on speculation that oil demand may wane in China because of concerns of a slowing economy after banks began restricting new loans in response to a push by regulators to contain credit.

“The short-term outlook is really not showing too much brightness,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. “China has been underpinning demand for oil and other commodities, so the idea that they’re going to rein things in is certainly a negative for sentiment.”

Lending growth in China slowed in the third week of January from the month’s first two weeks, the Shanghai Securities News reported yesterday, citing unidentified people.

Brent crude for March settlement was at $73.57 a barrel, up 28 cents, on the London-based ICE Futures Europe exchange at 12:50 p.m. local time. The contract declined 40 cents, or 0.5 percent, to $73.29 a barrel yesterday.

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