Oil Declines After Industry Report Shows Gain in U.S. Supplies

Sept. 16 (Bloomberg) -- Oil fell in New York after an industry report showed an increase in distillate and crude stockpiles in the U.S., the world’s biggest energy consumer.

Oil declined after the American Petroleum Institute reported distillate fuel inventories, including diesel and heating oil, climbed 5.2 million barrels while crude supplies rose 631,000 barrels. A U.S. Energy Department report today may show crude stockpiles declined and distillates increased.

“There is probably a little caution ahead of the report” from the Energy Department, said Toby Hassall, a research analyst with CWA Global Markets Pty in Sydney. “We are looking at very high stockpiles of distillates, which doesn’t bode well for the crude price, especially if we have a mild winter in the north this year.”

Crude oil for October delivery fell as much as 79 cents, or 1.11 percent, to $70.14 a barrel in electronic trading on the New York Mercantile Exchange. It was at $70.34 a barrel at 8:51 a.m. Singapore time. Yesterday, the contract rose $2.07 to settle at $70.93, the biggest increase since Sept. 8. Prices are up 58 percent this year.

The price gained 3 percent yesterday as Federal Reserve Chairman Ben S. Bernanke said the recession has probably ended, spurring expectations of an increase in fuel demand.

An Energy Department report today is forecast to show that U.S. crude-oil supplies fell 2.5 million barrels from 337.5 million in the week ended Sept. 11, according to the median of 15 estimates by analysts surveyed by Bloomberg News.

“The pre-emptive nature of the market might be starting to run its course, and we’re waiting for the fundamentals to really justify a fresh push higher,” Hassall said.

Distillate Inventories

Distillate fuel supplies surged to 170.3 million barrels last week, the API said. That’s the highest level since January 1983. The Department of Energy report is expected to show those inventories climbed 1.25 million barrels from 165.6 million the prior week, according to the survey.

Gasoline stockpiles increased 1.35 million barrels to 208.8 million last week, according to the API. The Energy Department report may show that inventories rose 700,000 barrels from 207.2 million the week before, the Bloomberg survey showed.

The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. in Washington today.

Oil-supply totals from the API and DOE moved in the same direction 76 percent of the time over the past four years, according to data compiled by Bloomberg.

API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Gasoline Consumption

Gasoline consumption was at an eight-month low for the second straight week as the U.S. Labor Day holiday failed to ignite demand before the end of the summer driving season, according to a MasterCard Inc. report.

Motorists bought an average 8.97 million barrels of gasoline a day in the week ended Sept. 11, MasterCard, the second-biggest credit-card company, said in its SpendingPulse report yesterday. That’s little changed from the prior week, when demand was the weakest since Jan. 9, and the fourth time this year that demand fell short of 9 million barrels.

Brent crude oil for November settlement fell as much as 85 cents, or 1.2 percent, to $69.01 a barrel on the London-based ICE Futures Europe exchange. The contract yesterday climbed $1.49, or 2.2 percent, to end the session at $69.86 a barrel.

The October contract expired yesterday at $67.35 a barrel, down 9 cents.

OPEC Forecast

The Organization of Petroleum Exporting Countries raised its global oil demand forecasts for this year and 2010 on expectations the world economy will return to growth.

OPEC, responsible for about 40 percent of worldwide oil supply, boosted its 2010 outlook by 150,000 barrels a day and 2009 by 140,000 barrels a day. The group now predicts that consumption will contract 1.8 percent this year to average 84.05 million barrels a day, and then expand 0.6 percent in 2010 to 84.56 million a day.

Nigeria’s main rebel group extended its cease-fire by 30 days and warned that its campaign targeting oil and gas installations will continue if the government doesn’t engage in meaningful talks.

“The government should use this extension of time to do the right thing instead of pretending to talk peace, while arming the military for a war it cannot win,” Jomo Gbomo, a spokesman for the Movement for the Emancipation of the Niger Delta, said in an e-mailed statement.