Crude Oil Trades Little Changed After Declining Most in Month

Oct. 27 (Bloomberg) -- Crude oil was little changed after falling the most in a month in New York yesterday on concern that prices have risen faster than demand.

Oil dropped as U.S. equities slumped on concern the government will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout. OPEC may increase production targets when it meets in December after the International Energy Agency warned that rising prices threaten the global economic recovery.

“The price of oil was pushed back below the $80 mark by the thought of OPEC increasing production at their next meeting in December and increased concerns over banking sector liquidity,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “The U.S. dollar index jumped up thanks to worries about market instability, helping also to weigh on the price of oil.”

Crude oil for December delivery rose 14 cents to $78.82 a barrel at 8:29 a.m. Singapore time. Yesterday, it dropped $1.82, or 2.3 percent, to close at $78.68 a barrel on the New York Mercantile Exchange, the biggest decline since Sept. 24 and the lowest settlement since Oct. 16. Prices have gained 76 percent this year and reached a one-year high of $82 a barrel on Oct. 21.

The Standard & Poor’s 500 Index tumbled 1.2 percent to 1,066.95 in New York. The Dow Jones Industrial Average retreated 104.22 points, or 1.1 percent, to 9,867.96. Almost five stocks dropped for each that rose on the New York Stock Exchange.

U.S. Supplies

The dollar traded at $1.4873 per euro at 9:30 a.m. in Tokyo from $1.4876 yesterday in New York. The greenback reached $1.5063 yesterday, the weakest level since August 2008.

Brent crude oil for December settlement declined 0.04 percent, or 3 cents, to $77.23 a barrel on the London-based ICE Futures Europe exchange at 8:19 a.m. Singapore time. Yesterday it declined $1.66, or 2.1 percent, to end the session at $77.26 a barrel.

An Energy Department report due tomorrow will show that U.S. inventories of crude oil rose 1.5 million barrels last week, according to the median of nine estimates by analysts in a Bloomberg News survey. Supplies in the week ended Oct. 16 climbed 1.3 million barrels to 339.1 million, leaving stockpiles 9.4 percent above the five-year average for the period.

Analysts forecast that inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week.

The Organization of Petroleum Exporting Countries will meet Dec. 22 in Luanda, Angola, to review production quotas as oil rises above $75 a barrel. Some member countries are able to pump more oil if the market requires it, OPEC President and Angolan Oil Minister Jose Maria Botelho de Vasconcelos said in an interview on Oct. 25.