London: Oil rose for the first time in three days before an energy department report forecast to show that gasoline supplies declined for an eighth week in the US, the world’s largest crude consumer.
Gasoline stockpiles probably declined by one million barrels from 216.7 million barrels in the longest stretch of declines since the summer of 2008, according to a Bloomberg survey of analysts before Wednesday’s data. Oil dropped as much as 0.6% in London earlier as Libyan rebels said they would accept a Turkey peace proposal if it includes an agreement for leader Moammar Gadhafi to relinquish power.
“I’m not convinced we’ve seen the highs for the moment,” said Gerrit Zambo, a trader at Bayerische of Landesbank in Munich. “I’m more bullish for oil because we still see further demand growth and the danger of unrest spreading to other oil-producing countries,” he said.
Brent oil for May settlement climbed as much as $1.27 to $122.19 per barrel on the London-based ICE Futures Europe exchange, trading for $121.69 as of 12.57pm on Tuesday, the contract declined $3.06, or 2.5%, to settle at $120.92, the lowest since 1 April.
Crude oil for May delivery gained as much as 0.7% to $106.97 per barrel on the New York Mercantile Exchange, and was at $106.69 per barrel at 12.58pm London time. On Tuesday, the contract fell $3.67 to $106.25, the lowest close since 30 March.
Brent, the European benchmark, traded at a premium of $15.01 per barrel to US futures on Wednesday, compared with $14.67 on Tuesday. The difference between front-month contracts in London and New York surged to a record $19.54 on 21 February as unrest spread in the Middle East and North Africa and stockpiles climbed at Cushing, Oklahoma, the delivery point for New York futures. The spread averaged 76 cents last year.
Wednesday’s Energy Department report, to be published at 10.30am in Washington, may show crude supplies increased by one million barrels, according to 16 analysts surveyed by Bloomberg.
New York futures plunged 3.3% on Tuesday after the International Energy Agency reported signs of an oil-demand slowdown and as Goldman Sachs Group Inc. forecast a substantial correction. The US, the world’s largest economy, will expand 2.8% this year, down from 2.9% last year and a 3% growth rate for 2011 forecast in January, the International Monetary Fund said on 11 April. It cut Japan’s 2011 growth forecast to 1.4% from 1.6% in a January forecast.
Libyan rebels said Gadhafi’s forces are stepping up attacks on Misrata and firing rockets into the city, and appealed for international help ahead of a meeting with their US-led allies in Qatar. The country has the largest crude reserves in Africa.
A small pullback is to be expected if the Libya situation is resolved, but it would just be speculatively driven, said Andrey Kryuchenkov, an analyst at VTB Capital in London. “But we don’t know the damage done to the oil infrastructure. Any genuine return of Libyan supplies has been written off,” he said.