Wednesday, March 10, 2010

Oil Trades Near $81 After Falling on Dollar, Supply Increase

March 10 (Bloomberg) -- Oil traded near $81 a barrel after falling as the dollar strengthened and an industry-funded report showed an increase in U.S. crude supplies, fanning concern that demand in the world’s biggest energy user is slow to recover.

Oil dropped yesterday after the U.S. currency rose against the euro amid concern that the Greek financial crisis will trigger a default on debts by other European countries. The American Petroleum Institute said crude inventories rose 6.5 million barrels last week. An Energy Department report today is forecast to show supplies climbed 2 million barrels.

“There’s a healthy amount of skepticism about both the global economic situation and sovereign debt problems in Europe,” said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy commodities. “This is leading to the revival of the dollar as a safe haven, which is hitting oil.”

Crude oil for April delivery traded at $81.33 a barrel, down 16 cents, in electronic trading on the New York Mercantile Exchange at 10:34 a.m. Sydney time. Yesterday, the contract fell 38 cents to settle at $81.49.

The dollar traded at $1.3611 per euro at 10:37 a.m. Sydney time, from $1.3602 yesterday. A stronger U.S. currency reduces the appeal of commodities as an alternative investment.

An Energy Department report today will probably show that U.S. inventories of crude oil rose, according to the median of 17 analyst responses in a Bloomberg News survey. The department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. in Washington.

Saudi Spare Capacity

Saudi Arabia had 4 million barrels a day of spare oil output capacity that can be absorbed into the market when global energy consumption recovers, the head of the kingdom’s state- owned oil company said yesterday.

“Oil supply will decline if there is no investment, so that 4 million could be absorbed by demand alone,” said Khalid al-Falih, chief executive officer of the Saudi Arabian Oil Co., in a speech at a Cambridge Energy Research Associates conference in Houston.

The kingdom, the world’s largest exporter, raised output by 100,000 barrels a day to 8.25 million in February, the highest level since December 2008, a Bloomberg News survey of oil companies, producers and analysts showed last month. Saudi Arabia can produce as much as 12.5 million barrels a day, al- Falih said.

Brent crude oil for April delivery dropped 56 cents, or 0.7 percent, to settle at $79.91 a barrel on the London-based ICE Futures Europe exchange yesterday.

0 comments :