Oil Trades Near 2-Day Low on Rising Fuel Stockpiles, European Debt Outlook

By Ben Sharples - Sep 15, 2011 7:25 AM GMT+0700

Oil traded near a two-day low in New York as signals that U.S. fuel demand is weakening countered optimism that European leaders will step up efforts to resolve the region’s sovereign debt crisis.

Futures were little changed after slipping as much as 0.4 percent. Gasoline stockpiles rose 1.94 million barrels last week, the biggest gain since June, according to the Energy Department. Supplies of distillate fuel, a category that includes heating oil and diesel, increased to the highest level since February. Equities and the euro climbed after German and French leaders said they are “convinced” Greece will remain in the single currency.

Crude for October delivery was at $88.80 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 10:23 a.m. Sydney time. The contract yesterday slid $1.30, or 1.4 percent, to $88.91. Prices are up 17 percent the past year.

Brent oil for October rose 1 cent to $112.41 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract was at a premium of $23.49 to U.S. futures, compared with a record $26.87 on Sept. 6.

U.S. gasoline stockpiles were forecast to fall, according to a Bloomberg News survey of analysts. Consumption of the motor fuel dropped 1.2 percent to 8.85 million barrels a day in the week ended Sept. 9, the lowest since May, the Energy Department report shows.

Angela Merkel and Nicolas Sarkozy, the leaders of Europe’s two biggest economies, issued a statement yesterday following a telephone conversation with Greek Prime Minister George Papandreou. Papandreou committed to meet deficit-reduction targets demanded as a condition for an international bailout, according to statements from governments in Athens, Berlin and Paris.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net