Oil Trades Near $62 on Larger-Than-Forecast U.S. Supply Decline

May 21 (Bloomberg) -- Crude oil traded little changed near $62 a barrel after rising yesterday when a government report showed that U.S. crude and gasoline inventories declined more than forecast.

Stockpiles dropped 2.11 million barrels to 368.5 million in the week ended May 15, the Energy Department said. A 400,000- barrel decrease was forecast, according to a Bloomberg News survey. Prices also climbed after refinery fires and unrest in Nigeria threatened supplies and the falling dollar spurred investors to purchase raw materials.

“The crude and gasoline inventory drops are very supportive to the market,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The problems in Nigeria and refinery disruptions are contributing to the rally.”

Crude oil for July delivery dropped 50 cents, or 0.8 percent, to $61.54 a barrel on the New York Mercantile Exchange at 8:49 a.m. in Sydney. Yesterday, oil rose $1.94, or 3.2 percent, to settle at $62.04 a barrel, the highest settlement since Nov. 10.

Gasoline supplies plunged 4.34 million barrels to 204 million. A 1.2 million-barrel drop was forecast, according to the median estimate of 15 analysts surveyed by Bloomberg News.

U.S. stocks retreated as the Federal Reserve predicted a deeper recession and concern grew that credit-card issuers will be hurt by new lending restrictions. The Standard & Poor’s 500 Index slipped 0.5 percent to 903.47 and The Dow Jones Industrial Average lost 0.6 percent to 8,422.04.

Rally Could Fizzle

“So far the trend is up,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. “I would still be cautious for what is to come after Memorial Day and the OPEC meeting. The rally could fizzle and the markets could calm for the summer and stay flat to down.”

The Organization of Petroleum Exporting Countries is unlikely to reduce output further when it meets on May 28, a member of Kuwait’s Supreme Petroleum Council was cited as saying by state-owned KUNA news agency yesterday. OPEC is still implementing a series of supply cuts announced last year.

The 11 OPEC members with quotas, all except Iraq, pumped 25.812 million barrels a day last month, a report from the group on May 13 said, citing secondary sources, which include estimates from analysts and news organizations. That’s up 225,000 barrels a day from March.

Gasoline for June delivery declined 1.95 cents to $1.7900 a gallon in New York at 8:51 a.m. Sydney time. Futures touched $1.8724 yesterday, the highest intraday price since Oct. 15.

Refinery Disruptions

Refineries operated at 81.8 percent of capacity, down 1.9 percentage points from the prior week, the Energy Department report showed.

Total U.S. daily fuel demand averaged 18.3 million barrels in the four weeks ended May 15, down 7.6 percent from a year earlier, the Energy Department report showed.

The industry-funded American Petroleum Institute reported on Tuesday a decline in crude-oil supplies of 4.47 million barrels for the period.

Disruptions at U.S. refineries included the shutdown of the catalytic cracker after a fire yesterday at Flint Hills Resources LLC’s Corpus Christi, Texas, plant. A catalytic cracker makes products such as gasoline and diesel. Sunoco Inc. shut a gasoline-making unit at its Marcus Hook, Pennsylvania, refinery after a fire on May 17.

Fighting between Nigerian troops and the militant group Movement for the Emancipation of the Niger Delta erupted on May 13. Nigeria produces low-sulfur oil, prized by U.S. refiners because of the proportion of high-value gasoline it yields.

Gold Rises

Energy and metals futures also gained after the dollar fell to the lowest level versus the euro in four months, bolstering demand for commodities as an alternative investment. The dollar traded at $1.3780 at 6:02 a.m. in Tokyo, after dropping 1.1 percent and touching $1.3830, the weakest level since Jan. 5.

Gold futures for June delivery rose $10.70, or 1.2 percent, to $937.40 an ounce on the Comex division of Nymex, the highest settlement since March 26. The Reuters/Jefferies CRB Index of 19 commodities increased 3.39 points, or 1.4 percent, to 244.84, the highest since Nov. 26.

Brent crude for July settlement rose $1.67, or 2.8 percent, to end the session at $60.59 a barrel yesterday on London’s ICE Futures Europe exchange, the highest since Nov. 5.