Crude Retreats Slightly On Europe Woes, Supply Data
Oil futures fell slightly Wednesday, weighed down by renewed pessimism over euro-zone debt troubles and weekly data showing inventories rose more than expected.
Light, sweet crude for January delivery ended the day down 49 cents, or 0.8%, at $100.49 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange lost $1.28 a barrel, or 1.2%, settling at $109.53.
Futures opened the day lower on worries that a hoped-for solution to sovereign-debt troubles will not emerge from a summit of European Union Leaders scheduled for Thursday and Friday. The worries were compounded after a senior German official said the government did not believe member nations were ready to take the necessary steps to solve the debt crisis. The official doubted all the nations were ready to agree to debt and deficit limits, as well as treaty changes allowing for central coordination of national budgets.
Euro-zone debt worries have weighed on the oil market for months as traders fear the crisis could trigger an economic downturn that would curb demand for crude. Oil fell as the dollar rose against a basket of other currencies in the ICE Dollar Index. Oil often falls as the dollar rises, as the commodity becomes more expensive for traders using other currencies.
Oil briefly dipped below $100 a barrel after the U.S. Energy Information Administration's weekly report on petroleum inventories painted an unexpectedly bearish picture, with inventories rising across the major categories. Crude stocks rose 1.3 million barrels, compared to a forecast of a 900,000-barrel decline according to a Dow Jones Newswires survey of analysts. Gasoline stocks rose 5.1 million barrels, outstripping a forecast of a 600,000-barrel rise. Meanwhile, distillate stocks, such as diesel and heating oil, rose 2.5 million barrels in comparison of analysts' estimates of a 1-million-barrel increase.
"We continue to be slaves to the news about Europe," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Lately anything affecting the financial markets, bullish or bearish, has more of an impact on energy prices than fundamentals of the individual commodities, at least in the short run for sure."
The gain pushed crude oil stocks above the five-year average level by 4.5 million barrels. Just two weeks ago, stocks were 3.6 million barrels below that mark. Meanwhile, the biggest weekly rise in U.S. gasoline stocks in 10 months last week came as demand averaged a 10-year low for the week of 8.574 million barrels a day, EIA data show.
Front-month January reformulated gasoline blendstock, or RBOB, lost 5.85 cents, or 2.2%, to $2.5869 a gallon. January heating oil was down 3.93 cents, or 1.3%, to $2.9824 a gallon.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.