Crude Oil Trades Near Four-Day High on Shrinking Supplies, U.S. Job Growth

By Ben Sharples - Oct 6, 2011 7:18 AM GMT+0700

Oil traded near a four-day high in New York as investors bet that shrinking crude stockpiles and signs of an economic recovery in the U.S. indicate fuel demand may increase in the world’s biggest consumer of the commodity.

West Texas Intermediate futures were little changed after climbing the most in almost five months yesterday. Inventories fell 4.68 million barrels last week, a report from the Energy Information Administration showed. A gain of 1.5 million barrels was expected, according to a Bloomberg News survey. U.S. companies added more jobs than expected in September, data from ADP Employer Services showed. German Chancellor Angela Merkel said she is ready to discuss aid for European banks.

“A surprisingly positive U.S. EIA inventory report provided additional upside for WTI prices,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. “Commodity prices improved as European authorities appear to be stepping up support for European banks and U.S. private sector employment data was better than expected.”

Crude for November delivery was at $79.57 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 11:09 a.m. Sydney time. The contract yesterday gained $4.01, or 5.3 percent, to $79.68. Prices are down 13 percent this year.

Brent oil for November settlement was at $102.47 a barrel, down 26 cents. It gained $2.94, or 3 percent, to $102.73 on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract was at a premium of $22.90 to New York crude, compared with a record of $26.87 on Sept. 6.

Cushing Supplies

Inventories at Cushing, Oklahoma, the delivery point for New York-traded futures, tumbled 831,000 barrels to 30.1 million, the lowest level since March 2010, according to the Energy Department report. Supplies declined for a tenth week.

Gasoline stockpiles fell 1.14 million barrels last week, the report showed. A 1.5 million-barrel increase was forecast, according to the median of 15 analyst projections in the Bloomberg survey. Inventories of distillate fuel, a category that includes heating oil and diesel, fell by 744,000 barrels, the report showed.

Oil has fallen this year on speculation Europe’s sovereign debt crisis will worsen a global economic slowdown, curbing demand for commodities. The International Monetary Fund said yesterday that European Union officials are working on plans to boost bank capital. German Chancellor Angela Merkel said she supports recapitalizing European banks “if there is a joint assessment that the banks aren’t adequately capitalized” and finance officials develop “uniform criteria.”

U.S. companies added 91,000 workers in September after an 89,000 gain in August, Roseland, New Jersey-based ADP said yesterday. The median forecast in a Bloomberg survey called for an addition of 75,000.

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

To contact the editor responsible for this story: Paul Gordon in Hong Kong at pgordon6@bloomberg.net