Oil Little Changed After Rising on Expected Fall in U.S. Supply

March 25 (Bloomberg) -- Crude oil was little changed from its highest close in four months after the U.S. stock market declined yesterday following calls by the nation’s two top banking officials for stronger regulation of financial firms.
Oil had climbed on speculation that an Energy Department report later today will show that U.S. supplies of gasoline and distillate fuel declined. Gasoline stockpiles dropped 650,000 barrels last week, according to the median of 14 responses in a Bloomberg News survey.
Oil “traded down in the after-hours market, receiving pressure from the 115 point drop in the Dow Jones,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle.
Crude oil for May delivery fell 38 cents, or 0.7 percent, to $53.60 a barrel at 9:39 a.m. Sydney time on the New York Mercantile Exchange. In New York yesterday, May futures rose 18 cents to $53.98 a barrel, the highest settlement since Nov. 28.
The Standard & Poor’s 500 Index lost 2 percent to 806.25 yesterday after its fourth-biggest rally since the 1930s. The Dow Jones Industrial Average slid 115.89 points, or 1.5 percent, to 7,659.97.
Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Timothy Geithner called yesterday for new powers to take over and dismantle failing financial firms after the troubled rescue of American International Group Inc.
Stockpiles
Oil futures had been buoyed by expectations that supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 100,000 barrels last week.
“The product markets are providing some support for crude,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York.
Crude oil stockpiles rose 1.1 million barrels in the week ended March 20 from 353.3 million the previous week, according to the Bloomberg survey. Inventories in the week ended March 13 were the highest since June 2007.
The Energy Department is scheduled to release its weekly supply report today at 10:30 a.m. in Washington.
Crude oil stockpiles rose 4.58 million barrels to 354.5 million in the week ended March 20, a report by the industry- funded American Petroleum Institute showed. The API inventory report was released yesterday at 4:30 p.m. in Washington.
OPEC
The Organization of Petroleum Exporting Countries, the International Energy Agency and the U.S. Energy Department cut their 2009 forecasts for oil demand this month. OPEC, the IEA and DOE see consumption slumping more than 1 million barrels a day this year.
OPEC agreed to hold output targets steady at its meeting in Vienna on March 15 on concern higher prices may harm an ailing global economy. Ministers pledged to tighten compliance with record cutbacks agreed on last year to bolster prices.
“OPEC countries can do very little to push prices up,” former Saudi Arabian Oil Minister Sheikh Ahmad Zaki Yamani said today at a seminar organized by the London-based Centre for Global Energy Studies. A reversal of the global economic recession would boost prices, he said.
Oil prices of $40 a barrel are too low, and a range between $60 and $75 is needed to allow output of higher-cost oil, Saudi Arabian Oil Minister Ali al-Naimi said last week in Geneva.
Crude-oil demand is set to “collapse” in the second quarter as refiners trim imports for seasonal maintenance, Edward Morse, head of economic research at LCM Commodities LLC, said at the CGES conference. U.S. government measures to resolve the financial crisis have helped prices stabilize and will likely prevent a drop toward $30 a barrel, he said.
“Oil-market fundamentals remain weak,” Morse said. “They don’t justify $50 a barrel; $75 is wishful thinking.”
Brent crude oil for May settlement declined 3 cents to end the session yesterday at $53.50 a barrel on London’s ICE Futures Europe exchange.