Tuesday, March 2, 2010

Crude Oil Trades Below $80 on Forecast Gain in U.S. Supplies

March 2 (Bloomberg) -- Oil traded below $80 a barrel in New York before a report that is expected to show U.S. crude supplies increased for a fifth week, signaling demand from the world’s biggest energy consumer may be slowing.

Oil dropped 1.2 percent yesterday as the dollar advanced against the euro after a European Union official said that Greece must achieve its 2010 deficit target to regain credibility. Crude supplies probably rose 1.6 million barrels last week from 337.5 million, according to the median of eight estimates from analysts surveyed by Bloomberg News before an Energy Department report this week.

“The market has been extremely volatile for several weeks,” said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy commodities. “We’ve traded on extraneous factors.”

Crude oil for April delivery traded at $78.76 a barrel, up 6 cents, in electronic trading on the New York Mercantile Exchange at 10:12 a.m. Sydney time. Yesterday, the contract fell 96 cents to $78.70.

Imports of crude oil increased 6.3 percent to 9.08 million barrels a day in the week ended Feb. 19, the highest level since October, the Energy Department said last week. It’s scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.

The dollar traded at $1.3567 against the euro at 10:15 a.m. Sydney time after gaining 0.5 percent to $1.3560 yesterday. A stronger dollar limits investors’ need for assets, such as oil, to hedge against inflation.

Brent crude for April settlement declined 70 cents, or 0.9 percent, to settle at $76.89 a barrel on the London-based ICE Futures Europe exchange yesterday.