Daily Market Updates from HY Markets

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By Moming Zhou

Jan. 31 (Bloomberg) -- Oil fell for a third day as U.S.

stocks dropped after an unexpected decline in consumer confidence in January.

Oil erased a 2.5 percent gain as the Conference Board s confidence index decreased to 61.1 from a revised 64.8 reading in December. The Standard & Poor s 500 Index also reversed an advance. Futures rose earlier as Germany s unemployment rate fell to a record low.

Expectations have become more bullish and now people are disappointed, said Bill O Grady, chief market strategist at Confluence Investment Management in St. Louis. The economy s been kind of stuck in this twilight zone between expansion and recession.

Crude for March delivery dropped 64 cents, or 0.7 percent, to $98.14 a barrel at 1:56 p.m. on the New York Mercantile Exchange. Prices have slipped 69 cents this month. Oil moved from $97.40 to $103.74 in January. The range of $6.34 was the tightest since October 2010.

Brent oil for March settlement rose 8 cents to $110.83 a barrel on the London-based ICE Futures Europe exchange. Prices have gained 3.2 percent in January.

The U.S. confidence figure was lower than the most pessimistic projection by economists surveyed by Bloomberg News.

The median forecast in the survey was 68. Readings above 50 signal growth.

The confidence number is weak and that s definitely going to put pressure on the market in the short term, said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. It s all led by equities. This is the last day of the month and fund managers want to lock in some gains.

Economic Data

Oil also moved lower as data showed business activity in the U.S. cooled in January and residential real estate prices fell more than forecast in November.

The Institute for Supply Management-Chicago Inc. said its business barometer declined to 60.2 from 62.2 in December.

Economists forecast the gauge would rise to 63, according to the median of 57 estimates in a Bloomberg survey.

The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent in November from a year earlier after decreasing 3.4 percent in the year ended in October, the group said in New York. Economists projected a 3.3 percent drop, according to the median estimate in a Bloomberg News survey.

The S&P 500 Index fell 0.3 percent after rising as much as

0.6 percent, paring the monthly increase to 4.1 percent. The Standard & Poor s GSCI Index of 24 raw materials slid 0.3 percent after rising as much as 1.6 percent.

Markets Lower

Basically all the markets are moving lower, said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York.

Oil gained earlier after Nuremberg-based Federal Labor Agency said Germany s adjusted jobless rate slipped to 6.7 percent, the lowest level since records began in 1991, and Greek Prime Minister Lucas Papademos said he s strongly committed to reaching a debt-swap pact with bondholders

European Union leaders completed a fiscal-discipline treaty that speeds sanctions on high-deficit states yesterday in Brussels. The treaty also requires euro countries to anchor balanced-budget rules in national law.

The German unemployment number was pretty positive, said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. There is some optimism that the Greek debt crisis may finally get resolved.

Chinese Add Storage

China raised its oil inventory capacity to 40 days of supply by the end of last year as it opened new state-owned and commercial storage sites, China National Petroleum Corp. said.

The world s biggest energy consumer finished building two state-owned stockpiles and four commercial ones in 2011, Beijing-based CNPC said on its website, without specifying the locations. China is building six more strategic petroleum reserve bases as part of the second phase of a program to store oil for emergencies, according to the statement.

The China news could also be supportive of prices, Schenker said.

Oil volume in electronic trading on the Nymex was 580,741 contracts as of 1:58 p.m. in New York.

Volume totaled 459,289 yesterday, 20 percent below the three-month average. Open interest was 1.38 million contracts.

For Related News and Information:

Top energy, oil stories: ETOP and OTOP News on oil inventories: TNI OIL INV News on oil markets: NI OILMARKET News on OPEC: NI OPEC Global energy statistics: ENST OLD Oil markets menu: OIL

--With assistance from Shobhana Chandra, Alex Kowalski and Bob Willis in Washington, Simone Meier in Zurich and Jonathan Stearns in Brussels. Editors: Richard Stubbe, Charlotte Porter

To contact the reporter on this story:

Moming Zhou in New York at [phone] or [e-mail]

To contact the editor responsible for this story:

Dan Stets at [phone] or

[e-mail]

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Feb. 2 (Bloomberg) -- Oil fell to a six-week low in New York as U.S. supplies climbed and fuel demand tumbled. Brent crude in London traded at the biggest premium to the American benchmark grade in 12 weeks.

Futures declined for a fifth day after the Energy Department reported yesterday that crude supplies in the U.S.

rose to a three-month high last week. Total fuel use dropped 8.3 percent to 17.7 million barrels a day, the least since 1999.

Tension over Iran’s nuclear program may ease after United Nations inspectors announced more talks in Tehran.

“The market is looking heavy because supplies are rising and demand is very weak,” said Phil Flynn, an analyst at PFGBest in Chicago. “A major reason for the recent rise in prices was concern about Iran. The hyperbole about the Iranian situation has calmed down.”

Crude oil for March delivery declined $1.25, or 1.3 percent, to settle at $96.36 a barrel on the New York Mercantile Exchange. Futures dropped to $95.44, the lowest level since Dec.

20. Prices are down 2.5 percent this year.

Brent oil for March settlement rose 59 cents to $112.15 a barrel on the London-based ICE Futures Europe exchange.

The European benchmark contract’s premium to West Texas Intermediate futures widened to as much as $15.93, the most since Nov. 11. Brent exceeded the price of Nymex oil by a record of $27.88 on Oct. 14 before narrowing to $6.82 in intraday trading on Jan. 3.

Dramatic Move

“The Brent premium to WTI came in quite dramatically late last year,” said Mike Wittner, head of oil market research at Societe Generale in New York. “It looks like we’re trying to find a balance after that big move. I don’t think the spread is heading for $20 or $25 again.”

Gasoline consumption decreased to 7.97 million barrels a day, the lowest level since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed yesterday.

“Gasoline supplies rose 3 million barrels even though production was down because demand is so weak,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania.

Crude oil supplies rose 4.18 million barrels to 338.9 million in the week ended Jan. 27. Inventories at Cushing, Oklahoma, the delivery point for New York-traded futures, advanced 1.48 million barrels to 30.1 million last week, the biggest gain since March.

Weak Demand

“Demand looked weak across the board, which is going to weigh on the entire U.S. energy complex,” Wittner said. “It’s now February and refineries have already started planned maintenance, which explains the rise in Cushing supplies.”

Refineries operated at 81.8 percent of capacity, down 0.4 percentage point from the week before. It was the lowest operating rate since May. Units are often idled for maintenance in February as attention shifts away from heating oil and before gasoline use rises.

“The bears worried about poor demand,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who expects Brent crude to trade in a range of $110.50 to $112.50 a barrel this week. “But Iran is still a cause for concern.”

Oil in New York surged to $103.74 a barrel on Jan. 4, the highest level since May 11, on concern that rising tension between Iran and the West would lead to a disruption of shipments from the Persian Gulf. The country has threatened to close the Strait of Hormuz, the transit point for about a fifth of global oil, if its exports are banned.

UN Inspectors

International Atomic Energy Agency inspectors are preparing for more talks over the “possible military dimensions to Iran’s nuclear program,” the Vienna-based agency said yesterday in a statement after a three-day visit that ended Jan. 31. The team will return to Tehran for talks on Feb. 21 and Feb. 22.

“The scheduled return of the UN inspectors to Iran is calming the market,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “We don’t know yet if this is just stalling, or whether this will lead to negotiations. Sanctions are hurting the Iranian economy and they might be ready for a deal this time.”

The Organization of Petroleum Exporting Countries will export 23.52 million barrels of crude a day in the four weeks to Feb. 18, 1.1 percent more than the 23.26 million barrels in the period to Jan. 21, the Halifax, England-based tanker-tracker Oil Movements said today in an e-mailed report. The figures exclude Angola and Ecuador.

OPEC output in January rose to the highest level in more than three years, led by a rebound in Libyan output, a Bloomberg News survey showed on Jan. 31. Production increased 183,000 barrels, or 0.6 percent, to an average 30.9 million barrels a day in January.

“OPEC keeps increasing production,” Flynn said. “There’s no shortage of oil.”

Oil volume in electronic trading on the Nymex was 540,876 contracts as of 2:03 p.m. in New York. Volume totaled 618,838 yesterday, 6 percent above the three-month average. Open interest was 1.42 million contracts, the most in three months.

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Feb. 3 (Bloomberg) -- Oil gained for the first time in six days, paring a weekly loss, after the U.S. jobless rate fell to the lowest level in three years.

Futures climbed as much as 1.2 percent after the Labor Department said the unemployment rate dropped to 8.3 percent in January, the least since February 2009. Nonfarm payrolls increased 243,000, the most since April. Oil dropped this week as inventories rose and demand weakened.

“It’s a really strong jobs report and not surprisingly it should give the market a boost,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “It showed that the U.S. economy is recovering.”

Crude for March delivery gained 73 cents, or 0.8 percent, to $97.09 a barrel at 1:28 p.m. on the New York Mercantile Exchange, rising from a six-week low. Prices are down 2.5 percent this week.

Brent oil for March settlement climbed $1.34, or 1.2 percent, to $113.41 a barrel on the ICE Futures Europe exchange.

Brent’s premium to Nymex’s West Texas Intermediate widened to $16.32.

The unemployment rate, derived from a separate survey of households, was forecast to hold at 8.5 percent, according to the survey median.

January’s payroll increase exceeded all forecasts in a Bloomberg News survey of economists. The median projection called for an increase of 140,000. Estimates by the 89 respondents ranged from gains of 95,000 to 225,000.

‘Markets Exploded’

The jump in employment was broad-based, including manufacturing, construction, temporary help agencies, restaurants and retailers.

“All of the markets exploded on the very bullish unemployment number,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “Any sign of an improving U.S. economy is positive for the oil demand picture.”

Crude also moved higher after a Washington Post columnist reported yesterday that U.S. Defense Secretary Leon Panetta believes there is a strong likelihood that Israel will strike Iran by the end of June. Panetta declined to comment.

“The market found support overnight on the headlines that pointed to the possibility Israel will attack Iran this spring,” said Bentz.

Iran has said it may close the Strait of Hormuz, the transit point for about a fifth of global crude, after the European Union announced Jan. 23 that it will implement an oil embargo starting July 1 to pressure the Islamic republic over its nuclear program.

Iran’s Supreme Leader Ayatollah Ali Khamenei said his country will carry out its threats in response to Western sanctions aimed at stopped its nuclear program if needed, the state-run Mehr news agency reported today.

Rising Inventories

Nymex futures fell for the past five days on signs of surging stockpiles. Total inventories climbed to a 13-week high of 338.9 million barrels, and stockpiles at the Cushing, Oklahoma, delivery point for the New York contract reached a six-week high of 30.1 million.

The current oil inventory level can support 23.4 days of refinery use, the most since July 1, according to the Energy Department.

“The inventory numbers are weighing on the market,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “I don’t want to say that we have a glut, but we do have plenty of stocks.”

The supply increase pushed the March contract’s discount to December to as much as $3.35 today from $1.38 on Jan. 27.

Brent Premium

Rising Cushing inventories also helped widen Brent’s premium over WTI, which has almost doubled this year, said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Enterprise Products Partners LP plans to start shipping oil from Cushing to the U.S. Gulf Coast June 1 after the Seaway pipeline’s flow is reversed.

“Cushing stocks are increasing and there won’t be new pipelines until later this year,” McGillian said. He added that Asian demand is boosting Brent.

Crude prices may fall next week, a Bloomberg News survey showed. Fourteen of 34 analysts, or 41 percent, forecast oil will drop through Feb. 10. Twelve respondents, or 35 percent, predicted prices will increase and eight estimated there will be little change.

Total petroleum demand in the U.S., the biggest oil consumer, fell to 17.7 million barrels a day last week, the lowest level since May 1999, according to the Energy Department.

Gasoline consumption decreased to 7.97 million barrels a day, the lowest level since September 2001.

Oil volume in electronic trading on the Nymex was 495,791 contracts as of 1:30 p.m. in New York. Volume totaled 745,272 yesterday, 27 percent above the three-month average. Open interest was 1.44 million contracts.

For Related News and Information:

Top energy, oil stories: ETOP and OTOP News on oil inventories: TNI OIL INV News on oil markets: NI OILMARKET News on OPEC: NI OPEC Global energy statistics: ENST OLD Oil markets menu: OIL

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The euro slid the most in a week

against the dollar and yen on concern Greece’s political leaders

will fail to reach an agreement allowing the nation to receive a

second bailout from international creditors.

The 17-nation currency slid against 13 of its 16 major

peers as Fitch Ratings said a Greek disorderly default “cannot

be wholly discounted.” The Dollar Index jumped before St. Louis

Federal Reserve President James Bullard speaks amid speculation

the U.S. central bank will avoid easing monetary policy further.

Australia’s currency retreated for the first time in five days

after the nation’s retail sales declined.

“The talks are influencing risk sentiment and the euro’s

dynamics,” Jeremy Stretch, head of currency strategy at

Canadian Imperial Bank of Commerce in London, said about the

Greek bailout negotiations. “Markets are still a little

nervous. A Greek default is not off the table.”

The euro fell as much as 1 percent to $1.3030, the steepest

intraday decline since Jan. 30, and traded 0.8 percent weaker at

$1.3057 at 7:11 a.m. New York time. It dropped 0.7 percent to

100.04 yen. The dollar was little changed at 76.60 yen.

Greece’s interim Prime Minister Lucas Papademos and the

three party leaders backing his government will meet around

midday in Athens to discuss a detailed agreement for meeting

conditions of an international rescue, a spokeswoman from the

premier’s office said today.

Greek Crisis

Papademos struck a tentative deal with political parties to

extend spending cuts after euro-area finance chiefs told them an

increase in the 130 billion-euro aid package wasn’t forthcoming.

Greece’s next tranche of payouts in maturing debt is due next

month.

The euro dropped 0.5 percent against the dollar last week

as an unresolved Greek debt-swap agreement with private

bondholders added to concern the region’s fiscal crisis is far

from over.

“Fitch expects Greece to undertake an orderly debt

restructuring, which would ensure that a payment system is in

place,” the ratings company said in a statement today.

“However, a disorderly default, which may include an exit from

the euro zone, cannot be wholly discounted.”

The euro has fallen 4.8 percent over the past three months,

the worst performance among the 10 developed-nation currencies

tracked by Bloomberg Correlation-Weighted Indexes. The yen has

advanced 3.6 percent and the dollar has gained 1.2 percent.

Yen Strength

Futures traders reduced their bets that the euro will

decline against the dollar, figures from the Washington-based

Commodity Futures Trading Commission showed. The difference in

the number of wagers by hedge funds and other large speculators

on a drop in the euro compared with those on a gain was 157,546

on Jan. 31, down from a record 171,347 a week earlier.

The yen rose against most of its major peers even after

Bank of Japan Governor Masaaki Shirakawa said the nation’s

economic condition is “severe” because of deflation and the

strong currency. The central bank is implementing monetary

easing measures and will take appropriate steps as needed, he

said in parliament in Tokyo today.

The Dollar Index, which IntercontinentalExchange Inc. uses

to track the greenback against the currencies of six U.S.

trading partners, climbed 0.6 percent to 79.392.

U.S. government data showed on Feb. 3 that nonfarm payrolls

rose by 243,000 in January, surpassing the 140,000 increase

estimated by economists. The benchmark yield on 10-year

Treasuries jumped 10 basis points to 1.92 percent that day, the

biggest gain since Dec. 20.

Inflation Target

“I need to see significant deterioration in the economy

and some threat of deflation or inflation moving significantly

below our inflation target before” backing more bond buying by

the Fed, Bullard said on Feb. 3 in an interview. He is due to

speak about inflation targeting today in Chicago.

The dollar weakened 0.5 percent against the euro on Jan. 25

after the Fed pledged to keep the benchmark interest rate near

zero until late 2014. The central bank purchased $2.3 trillion

of Treasury and mortgage-related bonds in two rounds of so-

called quantitative easing, or QE, that ended in June.

“The Fed is also taking into consideration the development

of the labor market when making rate decisions,” said You-Na

Park, a foreign-exchange strategist at Commerzbank AG in

Frankfurt. “There might be some speculation that the Fed might

not need to ease further.”

Aussie Rates

The Swedish krona fell against all but one of its major

peers as the implied volatility of three-month options on Group

of Seven currencies rose for the first time in four days.

The measure of volatility was 10.52 percent from 10.15

percent at the end of last week according to the JPMorgan G7

Volatility Index. An increase makes investments in currencies

with higher benchmark lending rates less attractive as the risk

in such trades is that market moves will erase profits.

The krona fell 1 percent to 6.7437 per dollar and

deprecated 0.2 percent to 8.8069 per euro.

The British pound fell as the spending cuts that helped the

U.K. preserve its AAA credit rating last year weigh on the

currency as investors lose confidence that Prime Minister David

Cameron will revive economic growth.

Sterling had its worst January since 2008, falling 0.6

percent, after a 3.1 percent advance in the second half of 2011,

according to data compiled by Bloomberg.

The pound was 0.4 percent weaker against the U.S. and

Japanese currencies, trading at $1.5752 and 120.7 yen. It

strengthened 0.3 percent to 82.94 pence per euro.

The Australian Bureau of Statistics said the country’s

retail sales fell 0.1 percent in December from a month earlier.

Economists had estimated a 0.2 percent gain.

The Reserve Bank of Australia will lower the benchmark

interest rate to 4 percent from 4.25 percent in a meeting

tomorrow, another survey of economists shows.

The so-called Aussie lost 0.7 percent to $1.0694 and

weakened 0.7 percent to 81.95 yen.

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Australian Dollar Falls From Six-Month High on Retail Sales, RBA

2012-02-06 18:04:50.504 GMT

By Candice Zachariahs

Feb. 6 (Bloomberg) -- Australia’s dollar fell from an almost six-month high after a government report showed retail spending unexpectedly declined, adding to the case for the Reserve Bank to lower interest rates tomorrow

The Aussie weakened against the yen for the first time in five days as economists forecast RBA Governor Glenn Stevens will cut the benchmark rate for a third meeting, damping the appeal of the nation’s assets. The New Zealand dollar declined from the strongest in almost five months versus the greenback on speculation recent advances were too rapid

“The market has got a high chance of a rate cut priced in for tomorrow and this number isn’t going to change tha

Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, referring to retail-sales data. “If they do deliver a cut, the Aussie might fall. But the major push to the Aussie from the RBA is going to come from their statement

Australia’s dollar fell 0.3 percent to $1.0735 at 12:55 p.m. New York time. It touched $1.0794 on Feb. 3, the most since Aug. 2. The currency declined 0.4 percent to 82.18 yen

New Zealand’s dollar weakened 0.1 percent to 83.46 U.S

cents from last week and 0.2 percent to 63.89 yen.

Retail sales in Australia declined 0.1 percent in December from a month earlier, the first drop in six months, the Bureau of Statistics said today. The result compares with the median forecast in a Bloomberg News survey of economists for a 0.2 percent gain.

Risk of $1.20

Swaps traders are betting on a 74 percent chance that the RBA will lower its cash rate to 4 percent from 4.25 percent when policy makers meet tomorrow, according to a Credit Suisse AG index. A separate index shows 88 basis points, or 0.88 percentage point, in cuts predicted within 12 months.

Today’s declines pared to 5.1 percent the Aussie’s gains this year against the U.S. currency and to 4.6 percent its advance versus the yen. The New Zealand dollar has risen 7 percent and 6.5 percent respectively over that perio

“The Australian dollar has been much more tightly correlated with swings in global risk appetite and asset prices than it has domestic economic developments and RBA policy

Todd Elmer, head of Group-of-10 foreign-exchange strategy for Asia excluding Japan at Citigroup Inc. in Singapore, wrote in a note to clients today. “With perceived tail risk from the European sovereign debt crisis diminishing despite concerns on a potential Greek default, this likely spells additional Australian-dollar appreciation

Elmer said it may be worth buying the Aussie on any declines after tomorrow’s decision with investors “too complacent” on risks for a gain to $1.20 and beyo

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By Moming Zhou

Feb. 7 (Bloomberg) -- Oil pared an earlier decline as Greek officials worked on a final draft of the financing document required to receive international funding to relieve the country’s sovereign-debt crisis.

Crude was little changed as the euro advanced against the dollar, curbing the appeal of commodities as an alternate investment to the U.S. currency. Earlier, futures fell in New York on estimates that U.S. supplies increased last week.

Oil for March delivery dropped 13 cents to $96.79 a barrel at 9:51 a.m. on the New York Mercantile Exchange. Earlier, futures touched $95.84 a barrel. Prices have declined 2.1 percent this year.

Brent oil for March settlement gained 18 cents, or 0.2 percent, to $116.11 a barrel on the London-based ICE Futures Europe exchange. The European benchmark cost as much as $20.70 more than WTI today, the widest gap since Oct. 24. The spread reached a record-high $27.88 on Oct. 14.

The euro gained as much as 0.5 percent against the dollar after dropping 0.3 percent.

For Related News and Information:

Top energy, oil stories: ETOP and OTOP News on oil inventories: TNI OIL INV News on oil markets: NI OILMARKET News on OPEC: NI OPEC Global energy statistics: ENST OLD Oil markets menu: OIL

--With assistance from Grant Smith in London. Editors: Margot Habiby, David Marino

To contact the reporter on this story:

Moming Zhou in New York at [phone] or [e-mail]

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By Moming Zhou and Mark Shenk

Feb. 7 (Bloomberg) -- Oil rose as the dollar dropped after Federal Reserve Chairman Ben S. Bernanke said the 8.3 percent rate of unemployment in January understates weakness in the U.S.

labor market.

Futures increased as much as 2.3 percent as the currency weakened on Bernanke’s comments and signs that Greece is near a debt agreement. West Texas Intermediate crude gained at a faster pace than Brent in London, reducing the European benchmark’s premium over New York oil for the first time in nine days.

“Bernanke made some pretty bearish statements and the dollar tanked,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “Once the dollar dropped you saw WTI rebound.”

Oil for March delivery rose $1.92, or 2 percent, to $98.83 a barrel at 2:16 p.m. on the New York Mercantile Exchange after falling to $95.84. Prices erased their 2012 decline.

Brent oil for March settlement gained 65 cents, or 0.6 percent, to $116.59 a barrel on the London-based ICE Futures Europe exchange.

The dollar fell to the lowest level against the euro since Dec. 12 after Bernanke said the U.S. has a long way to go before the jobs market operates “normally,” in testimony prepared for the Senate Budget Committee.

Commodities rose to the highest level in more than five months on his remarks. The Standard & Poor’s GSCI Index of 24 raw materials increased as much as 1.2 percent, led by oil, silver and gold.

U.S. Economy

“It’s all about Bernanke’s testimony as we are seeing the euro gaining against the dollar after his talk,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.

The euro also strengthened as Greece’s government and international creditors are working on the final draft of an agreement on budget and structural measures needed to free up a second aid package. The 17-nation currency increased as much as

1.1 percent.

“At this particular moment it looks like maybe there will be a deal in Greece,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

New York oil futures are $17.75 cheaper than Brent, down from yesterday’s $19.02. The price difference between the two benchmark grades widened to $20.70 a barrel in intraday trading today, the highest level since October.

“We finally start to see a retracement in the Brent-WTI spread,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “It went above $20 this morning and all of a sudden there is a correction in the spread.”

WTI-Brent Spread

The spread narrowed to as small as $7.93 on Dec. 27 after Enterprise Products Partners LP and Enbridge Inc. announced Nov.

16 that they will reverse the 500-mile Seaway pipeline in June to ship oil from Cushing, Oklahoma, the delivery point of Nymex futures, to the Gulf Coast. The spread has grown since then.

“The WTI-Brent spread had widened too much at the front recently,” said David Greely, head of energy research at Goldman Sachs Group Inc. in New York. “The Seaway pipeline is still scheduled to reverse in June, and the spread is too wide for June, July and the following months when the pipeline should be open.”

Oil volume in electronic trading on the Nymex was 914,878 contracts as of 2:18 p.m. in New York, the highest level, excluding floor trading, since Nov. 16, the day the Seaway pipeline reversal was announced.

Combined electronic and floor volume totaled 682,698 yesterday, 15 percent above the three-month average. Open interest was 1.47 million contracts, the highest level since Sept. 12.

Price Forecast

The U.S. Energy Department increased its crude-oil price projection for 2012 to $100.40 a barrel this year from $100.25 a barrel in January today in its monthly Short-Term Energy Outlook. It also trimmed global demand and non-OPEC production forecasts.

Oil fell as much as 1.1 percent earlier on speculation that U.S. crude inventories climbed to the highest level in more than four months. Stockpiles increased 2.5 million barrels, or 0.7 percent, to 341.4 million in the week ended Feb. 3, according to the median estimate of 10 analysts surveyed by Bloomberg News before an Energy Department report tomorrow.

Crude supplies swelled as refineries operated at 81.4 percent of capacity last week, according to the survey.

Inventories rose 4.18 million barrels to 338.9 million in the week ended Jan. 27, the Energy Department reported on Feb.

1. The refinery utilization rate fell to 81.8 percent in the same week, the second lowest for this time of year since 1992.

For Related News and Information:

Top energy, oil stories: ETOP and OTOP News on oil inventories: TNI OIL INV News on oil markets: NI OILMARKET News on OPEC: NI OPEC Global energy statistics: ENST OLD Oil markets menu: OIL

--With assistance from Grant Smith in London and Joshua Zumbrun in Washington. Editors: Margot Habiby, Richard Stubbe

To contact the reporter on this story:

Moming Zhou in New York at [phone] or [e-mail]

[HYM]

By Grant Smith and Ayesha Daya

Feb. 8 (Bloomberg) -- Oil rose to its highest in a week in New York after a report showed U.S. stockpiles shrank, signaling increased demand in the world’s biggest crude consumer.

West Texas Intermediate futures climbed to $99.65 a barrel, the highest since Jan. 31. Crude inventories fell 4.5 million barrels in the seven days ended Feb. 3, the first drop in three weeks, the American Petroleum Institute said after yesterday’s settlement. Analysts surveyed by Bloomberg News had forecast today’s Energy Department report would show supplies rose 2.5 million barrels.

“Inventories decreasing are adding to the supply concerns in the market,” said Sintje Boie, an analyst at HSH Nordbank in Hamburg. “Demand is quite strong because of the winter season.

There are already supply worries from Iran’s threat to stop exports to Europe.”

Crude for March delivery advanced as much as $1.24, or 1.3 percent, to $99.65 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.28 at 12:50 p.m. London time. Yesterday, it increased $1.50 to $98.41, the highest settlement since Jan. 31. Prices are up 14 percent from a year ago.

Brent oil for March settlement on the London-based ICE Futures Europe exchange rose for a seventh day, the longest run of advances since August. The European benchmark gained as much as 64 cents, or 0.6 percent, to $116.87 a barrel and was at a premium of $17.22 to West Texas grade, down for a second day.

The spread closed at $19.02 on Feb. 6, the widest settlement level in three months, and rose as high as $20.70 yesterday, the most since Oct. 25.

Price Outlook

WTI will average $100.40 a barrel this year, according to a forecast from the Energy Department. That’s 15 cents higher than the January estimate, it said yesterday in its monthly Short- Term Energy Outlook.

U.S. gasoline stockpiles rose 4.4 million barrels last week, the American Petroleum Institute report showed. Supplies probably gained 875,000 barrels in today’s government report, according to the median estimate of 10 analysts in the Bloomberg News survey. Distillate-fuel inventories, including diesel and heating oil, climbed 386,000 barrels compared with a projection for an 875,000-barrel decline.

Crude imports dropped 12 percent to 7.8 million barrels a day last week, the lowest since May 20, the API said. The daily intake of products declined 10 percent to 1.5 million barrels, the slowest rate since Jan. 6.

Bollinger Band

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

“The API data provided momentum for the price gains,”

said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Front-month prices for West Texas are in a trend- channel pattern, with the range broadly between about $95.50 on the downside and $100.50 on the upside.”

Oil in New York has technical resistance along the middle Bollinger Band on the daily chart, about $99.19 a barrel today, data compiled by Bloomberg shows. Investors tend to sell contracts as prices approach resistance. Futures slipped below the lower band yesterday before settling higher, signaling a rebound from chart support.

Goldman Sachs Group Inc. recommended selling WTI contracts for delivery in May and buying those for June. Rising inventories at the U.S. storage hub in Cushing, Oklahoma, will put pressure on short-term prices, the bank said in a report yesterday.

Crude stockpiles at Cushing, which typically drive price differences between monthly contracts, have increased 2.8 percent this year to 30.1 million barrels, according to the Energy Department.

For Related News and Information:

Top energy, oil stories: ETOP and OTOP News on oil inventories: TNI OIL INV News on oil markets: NI OILMARKET News on OPEC: NI OPEC Global energy statistics: ENST OLD Oil markets menu: OIL

--With assistance from Yee Kai Pin in Singapore and Ben Sharples in Melbourne. Editors: John Buckley, Raj Rajendran

[HYM]

Canada Dollar Falls as Risk Appetite Fades With Greece Optimism

2012-02-08 17:43:02.285 GMT

By Austen Sherman

Feb. 8 (Bloomberg) -- The Canadian dollar weakened versus its U.S. counterpart as optimism faded that Greek political leaders will agree to meet the requirements for a second international bailout, damping investor risk appetite.

The currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, erased earlier gains as crude oil, Canada’s biggest export, reversed an advance and North American stocks fell. The loonie fell earlier to its weakest level against Australia’s dollar since 1997. The Canadian dollar has traded this week within a one-cent range against the greenback.

“Given the tight range we have seen in the Canadian dollar, this move felt pretty big,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “The market is still concerned about Greece. Unless they come up with some positive headlines, I would expect a little risk-off.”

Canada’s currency depreciated 0.2 percent to 99.63 cents per U.S. dollar at 12:37 p.m. Toronto time, after losing as much as 0.5 percent and gaining 0.1 percent earlier. It has traded this week between 99.29 cents and 99.95 cents, following an advance on Feb. 3 to 99.28 cents, its strongest since Oct. 31.

One Canadian dollar buys $1.0037.

Crude oil for March delivery was little changed at $98.75 a barrel in New York after climbing earlier as much as 1.4 percent. The Standard & Poor’s 500 Index slipped 0.1 percent after gaining 0.3 percent earlier.

Bonds Fall

Government bonds fell for a second day, pushing benchmark two-year yields up four basis points, or 0.04 percentage point, to 1.08 percent, the highest level since Oct. 31. Yields on Canada’s 10-year note rose three basis points to 2.06 percent and touched 2.07 percent, the highest since Jan. 25.

Canada sold C$3.5 billion ($3.5 billion) of two-year debt today at an average yield of 1.095 percent. The auction attracted $8.2 billion in bids, for a bid-to-cover ratio of 2.34. The 0.75 percent notes are due in May 2014.

Housing starts in the nation declined less than forecast in January. Work began on 197,900 units at a seasonally adjusted annual pace, Canada Mortgage & Housing Corp. said on its website today. Economists forecast 194,000 starts, according to the median of 19 responses to a Bloomberg News survey.

European Central Bank policy makers are still divided on what contribution to make as part of a Greek debt restructuring, Reuters reported, citing two unidentified monetary-policy sources. Greek Prime Minister Lucas Papademos began negotiating with political parties supporting his government on the measures needed to qualify for rescue funds.

The Canadian dollar depreciated against the euro 0.3 percent to C$1.3221, weakening for a third day.

Commodity Currencies

The Australian dollar touched C$1.0784, its highest level against the loonie since May 1997, as stocks and commodities rose earlier on optimism an agreement on Greece would be reached. Australia, like Canada, is a commodity exporter. The Aussie traded later at C$1.0754.

“It’s highlighting that Canada in a risk-on environment seems to under perform, and in a risk-off over performs, against its commodity brethren,” Butler said.

The Canadian dollar gained 2.1 percent over the past three months against nine developed-nation counterparts monitored by Bloomberg Correlation-Weighted Indexes. The U.S. dollar rose 0.7 percent, while the euro dropped 3.9 percent. The Aussie has gained 5 percent.

For Related News and Information:

Foreign-exchange information platform: FXIP Foreign-exchange forecasts: FXFC Top currency stories: TOP FX Bond-yield forecasts: BYFC Top bond stories: TOPH Top Canada stories: TOP CA

--Editors: Greg Storey, Kenneth Pringle

To contact the reporter on this story:

Austen Sherman in New York at [phone] or [e-mail]

[HYM]

Euro Pares Gain Versus Dollar as Draghi Sees ‘Downside Risks’

2012-02-09 13:44:30.638 GMT

By David Goodman

Feb. 9 (Bloomberg) -- The euro pared gains versus the dollar after European Central Bank President Mario Draghi said the economic outlook faces “downside risks.”

The 17-nation currency strengthened for a third day against the yen after the European Central Bank left interest rates on hold at a policy meeting. The euro also rose versus most of its major counterparts after Greek politicians were said to have reached an agreement on austerity measures needed to obtain a bailout package.

The euro gained 0.1 percent to $1.3272 at 1:43 p.m. London time after rising to $1.3313, the strongest since Dec. 12. The common currency gained 0.5 percent to 102.62 yen after reaching

102.77 yen, the strongest since Dec. 13. The yen dropped 0.4 percent to 77.33 per dollar.

For Related News and Information:

Stories on currencies: NI FRX

Stories on central banks: NI CEN

Foreign-Exchange Forecasts: FXFC

Foreign-Exchange Information Portal: FXIP

--With assistance from Emma Charlton in London and Kristine Aquino in Singapore. Editors: Nicholas Reynolds, Mark McCord

[HYM]

Oil Declines From Three-Week High as Greek Bailout Held Back

2012-02-10 19:51:37.359 GMT

By Mark Shenk

Feb. 10 (Bloomberg) -- Oil dropped from a three-week high as euro-area finance ministers refused to approve a rescue package for Greece, boosting concern that the European debt crisis will reduce fuel demand.

Futures fell 1.2 percent after Luxembourg Prime Minister Jean-Claude Juncker, chairman of the group of euro-area finance chiefs, said yesterday that Greece won’t get financial aid until it implements an austerity plan. The International Energy Agency cut its 2012 global oil demand forecast for a sixth month, citing a “darkening” economic outlook.

“The market rallied earlier this week on signs that the Greek situation was about to be settled and is now giving back those gains,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The longer this crisis continues, the more it will diminish European economic growth and along with that the oil demand outlook.”

Crude oil for March delivery decreased $1.17 to settle at

$98.67 a barrel on the New York Mercantile Exchange. The contract rose for a third day yesterday, climbing 1.1 percent to $99.84, the highest close since Jan. 19. Prices increased 0.8 percent this week and are up 14 percent in the past year.

Brent oil for March settlement fell $1.27, or 1.1 percent, to $117.32 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York- traded West Texas Intermediate crude was at $18.65 from $18.75 at yesterday’s settlement.

Euro Retreats

The euro retreated from a two-month high against the dollar before a Greek parliamentary vote on austerity measures this weekend that Greek Finance Minister Evangelos Venizelos said amounted to a referendum on euro membership.

George Karatzaferis, the leader of one of three parties supporting Greek Prime Minister Lucas Papademos, said he wouldn’t support the austerity plan. He spoke hours after German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece was missing debt targets.

The Standard & Poor’s GSCI Index dropped as much as 1.5 percent. Twenty-one of the 24 raw materials on the index declined. A weaker euro and rising dollar reduce the appeal of commodities as an alternative investment.

“The markets can turn on a dime,” said Phil Flynn, vice president of research at PFGBest in Chicago. “If we get some headlines that the situation in Greece is hunky-dory, prices will run back up.”

‘Remorseless Picture’

The IEA cut its 2012 global oil demand forecast, predicting worldwide crude consumption will increase by 800,000 barrels a day, or 300,000 less than previously estimated, to 89.9 million barrels a day, according to the Paris-based agency’s monthly oil market report today.

Demand will drop in member nations of the Organization of Economic Cooperation and Development this year as Europe’s sovereign debt crisis slows growth, according to the IEA.

“It’s a pretty remorseless picture of decline for oil demand throughout the OECD,” David Fyfe, head of the agency’s market and industry division, said in a telephone interview from Paris. “These are mature markets, in which industry recovery is stuttering, and moving into recession in the case of Europe.”

The Organization of Petroleum Exporting Countries produced

30.9 million barrels a day of crude oil last month, the most since October 2008, the Paris-based IEA said. That’s up from a revised 30.82 million barrels in December.

China’s exports fell 0.5 percent in January as trade was disrupted by the Lunar New Year holiday, which ran from Jan. 22 to Jan. 28 this year. Imports dropped 15.3 percent.

In January, Chinese oil imports surged to a record.

Shipments from overseas rose 7.4 percent from a year earlier to

23.41 million metric tons, or about 5.54 million barrels a day, according to preliminary data today on the website of the Beijing-based General Administration of Customs.

Chinese Economy

The International Monetary Fund said in a Feb. 6 report that China’s economic expansion may be cut almost in half from its 8.2 percent estimate this year if Europe’s debt crisis worsens, a scenario that would warrant “significant” fiscal stimulus from the government.

“Concern about Chinese economic growth and the situation in Greece are raising worries that the global economy may be headed for a slowdown,” Flynn said.

Confidence among U.S. consumers fell more than forecast in February. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to 72.5 from 75 in January.

The median estimate in a Bloomberg News survey called for 74.8.

The U.S. and China, the two biggest oil-consuming countries, were responsible for 32 percent of global oil use in 2010, according to BP Plc’s Statistical Review of World Energy released on June 8. The European Union’s 27 members accounted for 16 percent of world demand in 2010, BP figures show.

Oil volume in electronic trading on the Nymex was 533,507 contracts as of 2:39 p.m. in New York. Volume totaled 669,719 yesterday, 10 percent above the three-month average. Open interest was 1.48 million contracts.

For Related News and Information:

Top energy, oil stories: ETOP and OTOP News on oil inventories: TNI OIL INV News on oil markets: NI OILMARKET News on OPEC: NI OPEC Global energy statistics: ENST OLD Oil markets menu: OIL

--With assistance from Lananh Nguyen in London. Editors: Margot Habiby, Charlotte Porter

To contact the reporter on this story:

Mark Shenk in New York at [phone] or [e-mail]