Tuesday, February 23, 2010

Oil Declines for First Time in Six Days on Forecast Supply Gain

Feb. 23 (Bloomberg) -- Oil declined for the first time in six days, dropping below $80 a barrel, before a report that is expected to show an increase in crude supplies in the U.S., the world’s biggest energy consumer.

Oil dropped as much as 0.6 percent as analysts forecast that stockpiles probably rose 1.9 million barrels last week from 334.5 million, according to the median of seven estimates in a Bloomberg News survey. That would be the highest inventory level since November. Gasoline supplies probably also increased, analysts said.

“Given the fundamentals, they don’t justify crude prices above $80 a barrel,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The trend in gasoline stocks has got to levels that are a lot higher in the U.S. than can be explained by a seasonal stock increase, and it probably is another bearish signal for the oil price.”

Crude oil for April delivery dropped as much as 45 cents, or 0.6 percent, to $79.86 a barrel in electronic trading on the New York Mercantile Exchange, and was at $80.01 at 11:07 a.m. Sydney time. Yesterday, the March contract rose 35 cents, or 0.4 percent, to settle at $80.16. The contract expired at the close of floor trading.

Gasoline supplies probably gained 1 million barrels from 232.1 million, a Bloomberg survey showed. Six of the analysts anticipated an increase, two predicted a decline and one said inventories were unchanged.

The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.

Brent crude for April settlement gained 42 cents, or 0.5 percent, to $78.61 a barrel on the London-based ICE Futures Europe exchange yesterday, the highest price since Jan. 12.