Oil Trades Near $77 After Falling on U.S. Crude Supplies Gain

Feb. 4 (Bloomberg) -- Crude oil traded near $77 a barrel in New York after dropping on a U.S. Energy Department report that showed a bigger-than-forecast increase in inventories as refineries idled units and imports climbed.

Oil declined 0.3 percent yesterday after the report said refineries operated at 77.7 percent of capacity, the lowest rate since at least 1989, excluding two periods of hurricane strikes along the Gulf of Mexico. Crude supplies rose 2.32 million barrels to 329 million last week. A 400,000 barrel gain was forecast in a Bloomberg News analyst survey.

“The refinery capacity utilization number really stood out,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. “It goes to show that demand for crude is really not there at the moment.”

Crude oil for March delivery traded at $76.94 a barrel, down 4 cents, in electronic trading on the New York Mercantile Exchange at 11:35 a.m. Sydney time. Yesterday, the contract fell 25 cents to settle at $76.98. Oil prices jumped as much as 81 cents and slipped 71 cents during yesterday’s session.

Prices also declined as the dollar gained against the euro for the first time in three days after a report showed U.S. companies cut fewer jobs. A stronger U.S. currency reduces the appeal of commodities as an alternative investment. The greenback traded at $1.3897 per euro at 11:12 a.m. Sydney time, from $1.3893 yesterday.

Refinery Operations

Refinery operating rates plunged to 66.7 percent of capacity in September 2008 when ports were shut because of hurricanes Gustav and Ike. The previous low of 69.8 percent was reached in September 2005 after hurricanes Katrina and Rita.

Imports of crude oil rose 7.1 percent to 8.43 million barrels a day last week, the biggest increase since September, the report showed. Fuel imports climbed 2.6 percent to 2.95 million barrels, the highest level since November.

Stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, fell. Distillate supplies dropped 948,000 barrels to 156.5 million. Inventories were estimated to drop 1.15 million barrels.

Brent crude oil for March settlement dropped 14 cents to $75.92 a barrel at the end of the session on the London-based ICE Futures Europe exchange yesterday.