Oil Is Little Changed Amid Doubts Over Impact of Stimulus Plans

Feb. 9 (Bloomberg) -- Crude oil traded little changed in New York amid doubts a $780 billion stimulus plan in the U.S. will lead to a rapid recovery in global energy demand.

Senate and Congress lawmakers due to vote on the plan today and tomorrow are more than “90 percent” agreed on its contents, Lawrence Summers, director of the National Economic Council, said yesterday. U.S. crude inventories have climbed in 17 of the past 19 weeks, leaving them 15 percent higher than the five-year average for the period, the Energy Department said.

“Obviously a stimulus package would go a long way toward improving the demand outlook,” said Toby Hassall, an analyst at Commodity Warrants Australia Ltd. in Sydney. “But these things take time to filter through. While sentiment may be lifted just from the announcement, we’ve still got inventories rising.”

Crude oil for March delivery was at $40.06 a barrel, down 11 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:22 a.m. Singapore time.

The contract traded between $38.60 and $42.68 last week and fell 2.4 percent to $40.17 a barrel on Feb. 6. Prices slumped as much as 6.2 percent that day after a report showed unemployment in the U.S. reached its highest since at least 1992.

The prospect of further production cuts by the Organization of Petroleum Exporting Countries and strike action in Nigeria, the fifth-largest supplier of oil to the U.S., failed to push crude beyond its recent trading range.

Approval Boost

Oil “could get up to the higher end of its range” once the U.S. stimulus plan is approved, Ben Barber, a broker with Bell Commodities Ltd. in Melbourne, said in a Bloomberg Television interview. “There’s a lot of different things playing it from both sides. You’ve got the OPEC cuts and the global slowdown that is putting a lot of pressure on it.”

New York oil futures have fallen 10 percent this year and are down 73 percent from the record $147.27 reached July 11 as a global recession cuts demand for oil and other commodities.

Advanced economies are already in a “depression” and “a lot of downside risk” remains, the International Monetary Fund’s Managing Director Dominique Strauss said Feb. 7 in Kuala Lumpur.

Brent crude oil for March settlement was trading 6 cents lower at $46.15 a barrel on London’s ICE Futures Europe exchange at 10:23 a.m. in Singapore. It dropped 0.5 percent to $46.21 on Feb. 6.

OPEC pumps about 40 percent of the world’s oil and has cut daily output by 4.2 million barrels since September in a bid to prevent a glut and stem sliding prices.

OPEC will likely reduce production again next month in a bid to restore prices to $70 a barrel, Agence France-Presse reported Iraqi Oil Minister Hussain al-Shahristani as saying on Feb. 7.

Nigeria Strike

Oil industry managers in Nigeria, OPEC’s seventh-largest producer, are due to start an indefinite strike today to protest attacks and abductions targeting oil installations.

Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended Feb. 3, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 29,276 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 22,376 contracts, or 43 percent, from a week earlier.