Oil Falls on Forecast of Increase in U.S. Fuel Inventories

Crude oil fell on speculation that a government report will show U.S. fuel inventories climbed as the recession curbed consumption.
An Energy Department report tomorrow may show that gasoline stockpiles gained for a fifth week, according to a Bloomberg News survey. Prices rose earlier today as earnings from Goldman Sachs Group Inc. topped analysts’ estimates and a report showed that U.S. retail sales grew.
“Prices were up earlier but just couldn’t hold on,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant. “This reinforces my view that the market is headed for fresh lows unless it gets a lot of help” from inventory data.
Crude oil for August delivery declined 28 cents, or 0.5 percent, to $59.41 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures increased as much as $1.77, or 3 percent, earlier today.
Supplies of distillate fuel, a category that includes diesel and heating oil, probably rose 2 million barrels last week, according to the median of 14 responses in a Bloomberg news survey. Stockpiles climbed 3.74 million barrels to 158.7 million in the week ended July 3, the highest since January 1985, according to the department.
The Energy Department is scheduled to release its weekly petroleum supply report tomorrow at 10:30 a.m. in Washington. The American Petroleum Institute is scheduled to release its weekly report at 4:30 p.m. today in Washington.
“The fundamentals of the oil market are very bearish right now,” said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. “There’s not enough traction from either the equity or currency markets to supersede this fundamental weakness.”
Global Demand
Daily crude-oil consumption worldwide will increase by 500,000 barrels, or 0.6 percent, to 84.3 million in 2010 as industrial production gradually picks up after this year’s recession, the Organization of Petroleum Exporting Countries said today in a report.
The International Energy Agency forecast that global demand will increase by 1.4 million barrels a day, or 1.7 percent, to 85.2 million next year, in a July 10 report.
Brent crude oil for August settlement declined 1 cent to $60.68 a barrel on London’s ICE Futures Europe Exchange