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Oil Rises to Six-Month High on Supply Drop, Fed-Stimulus Bets
2010-11-03 07:40:43.369 GMT
By Christian Schmollinger and James Paton
Nov. 3 (Bloomberg) -- Oil hit a six-month high on signs
U.S. crude inventories are dropping and speculation the dollar
will decline on stimulus measures by the Federal Reserve,
boosting the appeal of commodities.
The Fed, wrapping up a two-day meeting today, may announce
a plan to purchase at least $500 billion in long-term
securities, according to economists surveyed by Bloomberg News.
This policy, known as quantitative easing, may weaken the
dollar, bolstering investors' demand for oil. Crude stockpiles
in the U.S., the world's biggest oil consumer, dropped 4.1
million barrels last week, the most since July, the industry-
backed American Petroleum Institute said yesterday.
"The news tonight from the Fed on the quantitative easing
will be the big thing for the oil market," said Serene Lim, an
energy and commodity strategist at Australia and New Zealand
Banking Group Ltd. in Singapore. "Everyone is a bit cautious
ahead of the report. The inventory levels being drawn down are
seen as a positive."
Oil for December delivery rose for a third day, gaining as
much as 60 cents, or 0.7 percent, to $84.50 a barrel on the New
York Mercantile Exchange, the highest since May 4. The contract
was at $84.26 at 2:59 p.m. Singapore time. Futures are up 6.1
percent this year.
The dollar has dropped 9.1 percent versus the euro since
Aug. 27, when Fed Chairman Ben S. Bernanke said the central bank
"will do all that it can" to sustain economic growth, fueling
speculation that a resumption of quantitative easing would
debase the dollar.
The U.S. currency declined against most of its major
counterparts yesterday, falling 1 percent to $1.4034 per euro in
New York.
Supplies Fall
U.S. crude stockpiles decreased 1.1 percent last week to
367.6 million barrels, according to yesterday's API report.
Gasoline supplies declined by 3.2 million barrels to 219.7
million and distillate inventories dropped 4.7 million to 161.4
million, the industry group said.
An Energy Department report today is forecast to show
distillate fuel stockpiles, including diesel and heating oil,
fell to their lowest level since July. Inventories probably
declined 1 million barrels in the week ended Oct. 29, according
to the median estimate from 17 analysts surveyed by Bloomberg
News. All respondents said supplies would fall.
U.S. crude inventories probably increased 1.5 million
barrels, the survey showed. Stockpiles rose 5.01 million barrels
to 366.2 million in the week to Oct. 22, the highest level since
July and 13 percent above the five-year average.
Brent crude for December settlement climbed as much as 47
cents, or 0.6 percent, to $85.88 a barrel on the London-based
ICE Futures Europe exchange. Yesterday, the contract rose 79
cents, or 0.9 percent, to $85.41, the highest settlement since
May 4.
For Related News and Information:
Top energy, oil stories: ETOP <GO> and OTOP <GO>
News on oil inventories: TNI OIL INV <GO>
News on oil markets: NI OILMARKET <GO>
Global energy statistics: ENST <GO>
--Editors: Clyde Russell, Alexander Kwiatkowski
To contact the reporters on this story:
Christian Schmollinger in Singapore at +65-6212-1898 or
christian.s@bloomberg.net;
James Paton in Sydney at +61-2-9777-8698 or
jpaton4@bloomberg.net
To contact the editor responsible for this story:
Clyde Russell at +65-6311-2423 or crussell7@bloomberg.net
