Crude Oil Advances a Second Day on Decline in U.S. Supplies, Europe Talks

Oil advanced for a second day in New York on signs that crude stockpiles are shrinking in the U.S., and on speculation that European leaders may agree on steps to address the region’s debt crisis during talks tomorrow.
The industry-funded American Petroleum Institute said crude supplies fell the most in six weeks. An Energy Department report today may show inventories dropped for a seventh week, the longest run of declines in two years. Euro-area government chiefs are meeting tomorrow in Brussels for the second time in a month as they aim to break a deadlock over a new Greek rescue.
“There’s still some hope we’ll see some kind of solution regarding the European debt crisis,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “And we saw a stock draw in the API numbers, which pulls crude higher. All in all, sentiment is more positive but not strongly bullish.”
Crude for August delivery increased as much as $1.37, or 1.4 percent, to $98.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.80 at 12:05 p.m. London time. The contract expires today. Prices have risen 28 percent in the past year. The more-actively traded September future gained $1.20 to $99.06. Brent oil for September settlement advanced as much as $1.39, or 1.2 percent, to $118.45 a barrel on the ICE Futures Europe exchange in London.

Stock Draws

U.S. crude supplies declined 5.2 million barrels to 354.2 million, the biggest drop since the week ended June 3, according to the American Petroleum Institute. A Bloomberg News survey shows that the Energy Department report may show stockpiles fell 2 million barrels last week.
“We continue to see stock draws,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $113 a barrel in the third quarter. “Crude supplies are still relatively high compared with history but it’s undoubtedly positive for oil prices.”
U.S. inventories are about 4 percent above the average of the past five years, according to Energy Department data.
The American Petroleum Institute 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. In the past four years, the indicators have moved the same direction 75 percent of the time for oil.
Gasoline supplies increased 1.96 million barrels to 210.3 million, the American Petroleum Institute said. It was the first increase in five weeks. The Energy Department report may show stockpiles fell 250,000 barrels, according to the Bloomberg survey.

Ichimoku Cloud

Oil in New York may extend gains as prices approach an area on daily technical charts where orders to buy may be clustered, according to data compiled by Bloomberg. Crude is rising to the first so-called leading-span line on its “ichimoku cloud”, at about $99.55 a barrel today. Front-month futures also opened today’s trading above the 50-day moving average for the first time since May 4, signaling the market may climb further.
Prices surged yesterday after the Commerce Department said work began on 629,000 houses in the U.S. at an annual pace in June, up 15 percent from May and the fastest rate in five months. Reports today will show sales of existing homes also increased. (Bloomberg)