Crude Oil Little Changed as Inventories Gain, Equities Retreat

April 30 (Bloomberg) -- Crude oil was little changed after a government report yesterday showed inventories of the fuel climbed, while gasoline inventories posted an unexpected drop as refiners reduced operating rates.

Gasoline supplies declined 4.7 million barrels to 212.6 million last week, the biggest reduction since September, the Energy Department said. Stockpiles were forecast to climb by 200,000 barrels, according to a Bloomberg News survey. Prices also increased after stocks rallied and the dollar fell.

“Nobody was looking for a gasoline decline of that size,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida. “This shows that refineries are keeping processing rates too low because there’s obviously some demand out there for gasoline.”

Crude oil for June delivery fell 30 cents, or 0.6 percent, to $50.67 a barrel at 9:07 a.m. Sydney time on the New York Mercantile Exchange.

In New York trading yesterday, June futures rose $1.05 to settle at $50.97 a barrel. Prices are up 14 percent this year.

Refineries operated at 82.7 percent of capacity, down 0.8 percentage point from the prior week. Analysts forecast that operating rates would climb 0.2 percentage point.

Inventories of crude oil rose 4.05 million barrels to 374.7 million in the week ended April 24, the report showed. The gain left supplies the highest since September 1990 and 15 percent greater than the five-year average for the period. Stockpiles were forecast to increase by 1.8 million barrels, according to the median response of 14 analysts surveyed.

‘Persistent Accumulation’

“Crude-oil supplies have risen in 18 of the last 21 weeks,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “It’s surprising that the market can still try to rally in spite of the persistent accumulation of stockpiles.”

Inventories of distillate fuel, a category that includes heating oil and diesel, climbed 1.79 million barrels to 144.1 million. A 1-million-barrel gain was forecast.

“The weekly numbers haven’t been kind to the market recently,” said Kyle Cooper, an analyst at energy consultant IAF Advisors in Houston. “It’s hard to explain why prices aren’t lower because there is plenty of petroleum.”

Total daily fuel demand in the U.S. averaged 18.4 million barrels in the four weeks ended April 24, down 6.8 percent from a year earlier, the department said. Consumption of gasoline was down 0.5 percent and distillate use was 11 percent lower.

“Inventories are high, there’s plenty of spare production capacity and there’s plenty of spare refining capacity,” said Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington. “The only decent news is gasoline.”

Financial Influence

U.S. stocks rose, pushing the Standard & Poor’s 500 Index toward its best month since 2000, as companies beating profit forecasts outnumber those that trailed 10-to-1. The S&P 500 climbed 2.2 percent to 873.64. The Dow Jones Industrial Average increased 2.1 percent to 8185.73.

Equities markets remained higher after the Federal Reserve said the “economic outlook has improved modestly” since March. The Fed kept the federal funds target rate at a range of zero to 0.25 percent for the third straight meeting and repeated its intentions to keep the benchmark low.

“We are looking at the stock market and the weaker dollar,” Evans said. “Those financial stories are having a bigger influence on the oil market than the direct petroleum fundamentals.”

The dollar fell 0.8 percent to $1.3252 per euro yesterday, from $1.3149 a day earlier.

Consumer confidence in the U.S., the world’s biggest oil- consuming country, jumped more than forecast in April. The Conference Board’s sentiment index climbed to 39.2, the highest level since November, from 26.9 in March, the New York-based research group said earlier this week.

Consumer Sentiment

“Consumer sentiment is starting to improve, which is a forward looking indicator” Brodrick said. “The GDP number was terrible, but that’s a backward-looking indicator.”

The Commerce Department reported yesterday that the U.S. economy plunged in the first quarter, capping its worst performance in five decades. Gross domestic product fell at a 6.1 percent annual pace, the department said.

Crude oil in New York has traded between $43.83 and $53.90 this month as inventories climbed and equities rebounded on speculation the economy will recover later this year.

“The energy markets are range-bound and lurching from news story to news story,” Sieminski said.

The Organization of Petroleum Exporting Countries will keep all options open, including a production cut, before its meeting next month, Shokri Ghanem, Libya’s top oil official, said yesterday in an interview in Nicosia, Cyprus. The group meets May 28.

OPEC agreed to slash production by 4.2 million barrels a day from September levels to bolster prices.

Brent crude for June settlement rose 79 cents, or 1.6 percent, to end the session at $50.78 a barrel yesterday on London’s ICE Futures Europe exchange.