Oil falls for 1st day in 5; US gasoline stocks rise

Oil falls for 1st day in 5; US gasoline stocks rise
Comment E-mail Print Share
First Published: Wed, Aug 04 2010. 08 23 AM IST
Updated: Wed, Aug 04 2010. 08 23 AM IST
Singapore: Oil fell for the first day in five on Wednesday as a rally that drove prices to three-month highs near $83 a day earlier ran out of steam, while industry data showed US gasoline stockpiles rose unexpectedly last week.
The dollar hovered near a three-month trough against the euro following Tuesday data that showed US consumer spending and incomes were flat in June and the index for pending sales of previously owned homes fell to a record low.
US crude for September fell as much as 41 cents to $82.14 a barrel and was down 16 cents at $82.39 by 0243 GMT, after touching $82.64 on Tuesday, the highest intraday price for a front-month contract since 5 May.
On Monday it topped $80 for the first time in three months. ICE Brent shed 3 cents to $82.65.
“The market is taking a breath,” said Clarence Chu, an energy trader at Hudson Capital Energy in Singapore. “I can’t rule out it will rally again. The way it broke through $80 was very bullish for sentiment. But now it’s starting to run out of steam.”
Japan’s Nikkei average fell 1.1% on Wednesday after Wall Street stocks paused a day earlier, having reached their highest level in 2-months at the beginning of the week. Disappointing earnings from Dow Chemical and Procter & Gamble on Tuesday and the weak US macroeconomic indicators were weighing on equities.
Investors sometimes resort to commodities to preserve value at times of declining financial markets. A weaker greenback also boosts the purchasing power of consuming nations where oil demand is surging.
“For the last couple of days it has been all dollar-driven,” Chu said. “All the data indicates that the US recovery is slowing down, most likely because of the end of the stimulus package.”
Euro zone and US non-manufacturing indicators will provide further direction for prices later on Wednesday, while government statistics on oil inventories and demand from top consumer the United States will follow at 8:00pm.
US crude stockpiles dropped by 776,000 barrels in the week to 30 July, statistics from the American Petroleum Institute showed late on Tuesday, compared with analysts expectations for a 1.4 million barrel draw.
The nation’s gasoline supplies posted a surprise increase of 2.3 million barrels, versus forecasts for a 400,000-barrel decline, while distillate fuel stockpiles including diesel rose 1.1 million barrels, roughly in line with expectations.
Tropical Storm Colin degenerated into a low pressure area as it encountered wind sheer in the western Atlantic Ocean, the US National Hurricane Center said in its latest advisory late on Tuesday.
The disorganized system, which was not expected to regenerate in the near term, was not seen as a threat to Gulf of Mexico oil and gas production, with most computer models showing it tracking east of Florida and toward the Southeast US coast.
BP pumped heavy drilling mud into its blown-out Gulf of Mexico well on Tuesday in a “static kill” operation it hopes will help permanently plug the world’s worst accidental marine oil spill.
Comment E-mail Print Share
First Published: Wed, Aug 04 2010. 08 23 AM IST