Crude Tumbles Despite Declines in Total Petroleum Inventories

ONG Focus | Insights | Written by Oil N' Gold | Wed Nov 03 10 11:19 ET

Total crude oil and petroleum products stocks slumped -5.46 mmb to 1127.32 mmb in the week ended October 29. This is the lowest level since August 2010. Although crude oil inventory rose +1.95 mmb to 368.16 mmb, fuel stockpiles dropped further. Crude stock builds last week concentrated in the Gulf Coast (+1.25 mmb) and the West Coast (+3.05 mmb) while the East Coast, Midwest and Rocky Mountain all recorded dips. Utilization rate fell -1.9% to 81.8% after rising over the past 2 weeks.

Concerning oil products, both gasoline and distillate stockpiles declined during the week. Gasoline inventory fell -2.69 mmb to 212.25 mmb while that for distillate dipped -3.57 mmb to 164.87 mmb. Gasoline demand slid for the first time in 3 weeks, by -3.67% to 9.02M bpd. However, both production (-2.53%) and imports (-12.81%) dropped, offsetting the pile-up. Distillate demand (+1.03%) crawled higher but the pace decelerated from the past 2 weeks. The draw in stockpile was also driven by declines in production (-3.20%) and imports (-51.58%).

WTI crude oil spiked to 85.36 immediately after the report. Price then tumbled and broke below 84 as investors took profit ahead of Fed's announcement. US data released today came in better than expected, raising worries that Fed's easing measures may be mild.

Weekly change in inventory as of 29/10/10

Comparison between API and EIA reports: Forecast (using API's inventory level)

API collects stockpile information on a voluntary basis from operators of refineries, 76% of the time, using data in the past 4 years.

Source: Bloomberg, API, EIA

 

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<b>Gold</b> Declines for First Time in Three Days as Dollar Advance Curbs Appeal

Gold declined for the first time in three days as the dollar advanced, curbing the appeal of commodities as alternative investments.

Bullion for immediate delivery fell as much as 0.5 percent to $1,347.35 an ounce at 12:51 p.m. in Melbourne, after reaching an all-time high of $1,364.77 on Oct. 7. The dollar rose 0.2 percent against a basket of six major currencies. The precious metal typically moves in the opposite direction to the dollar.

“Given that we have seen solid upward movements in the gold price for some time now, it is just an opportunity for market participants to catch their breath,” said Gavin Wendt, senior resource analyst at MineLife Pty in Sydney.

The dollar rose before the Federal Reserve releases today minutes of its policy meeting on Sept. 21, when the central bank said it was willing to ease monetary policy further to sustain the economic recovery.

Gold for December delivery on the Comex in New York fell 0.4 percent to $1,348.90 an ounce. Futures have advanced 23 percent this year and reached an all-time high of $1,366 an ounce on Oct. 7.

“The precious metals markets remain range-bound since Friday afternoon, with very little interest coming from the physical market for gold and silver at current price levels,” Walter de Wet, an analyst at Standard Bank Plc in London, wrote in a note.

The dollar traded at $1.3864 per euro at 9:36 a.m. in Tokyo from $1.3876 in New York yesterday. The greenback last week reached the lowest level since January against the basket of six major currencies.

Global holdings in exchange-traded products fell about 1.2 metric tons to 2,083.55 tons on Oct. 11, according to Bloomberg data from 10 providers, after reaching a record 2,097.01 tons on Sept. 30.

Silver fell 0.8 percent to $23.1078 an ounce at 12:44 p.m. Melbourne time after gaining as much as 1.6 percent to $23.6325 an ounce yesterday, the highest price since 1980.

Platinum gained 0.3 percent to $1,691.38 an ounce, while palladium was little changed at $587.63 an ounce after reaching a nine-year high of $604 last week.

To contact the reporter on this story: Wendy Pugh in Melbourne at wpugh@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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<b>Gold</b> Declines for First Time in Three Days as Dollar Advances

October 12, 2010, 6:45 AM EDT By Nicholas Larkin and Wendy Pugh

Oct. 12 (Bloomberg) -- Gold declined for the first time in three days in London as a stronger dollar curbed demand for the metal as an alternative asset and as some investors sold bullion after its rally to a record.

The dollar gained as much as 0.7 percent against the euro today. Gold, which usually moves inversely to the greenback, reached a record $1,364.77 an ounce on Oct. 7. Bullion’s rally had driven the relative strength index above 70, a sign to some analysts and traders who study technical charts that prices may be poised to drop.

“The U.S. dollar is a bit stronger, which is a negative,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. There may be “a bit of profit-taking,” and lower prices for other commodities are pressuring gold, he said.

Immediate-delivery bullion lost $11.35, or 0.8 percent, to $1,342.70 an ounce at 11:20 a.m. in London. Gold for December delivery was 0.8 percent lower at $1,343.40 an ounce on the Comex in New York.

Bullion fell to $1,343.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,351.50 at yesterday’s afternoon fixing. Five of the six main industrial metals on the London Metal Exchange and crude oil futures in New York declined today. Silver, platinum and palladium also fell.

Gold should account for 15 percent of a portfolio on a three-year view and 13 percent on a six-month view, Fredrik Nerbrand, global head of asset allocation at HSBC Bank Plc, said in a report today.

Winning Streak

The metal is “not merely a hedge against inflation but one of the few assets that hedges against tail risks,” Nerbrand said in “The Allocator” report. “The fact that gold is still under-owned and opportunity costs are still low should boost investor appetite further.”

Gold, up 23 percent this year, is heading for its 10th consecutive annual gain, the longest winning streak since at least 1920. Bullion has outperformed global equities, Treasuries and most industrial metals, prompting record investment in gold- backed exchange-traded products. The metal rallied as central banks and governments maintained low borrowing costs and spent trillions of dollars to stimulate economies.

“Gold has run so hard in the past couple of months that it was ready for a bit of a breather and we are just seeing a bit of consolidation,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. The movement in the dollar was likely a catalyst today for some weakness in the metal, he said.

Quantitative Easing

The dollar rose before the Federal Reserve releases today minutes of its policy meeting on Sept. 21, when the central bank said it’s willing to ease monetary policy further to bolster the economy. The Fed may next month announce about $500 billion of bond purchases as it undertakes further quantitative easing, Goldman Sachs Group Inc. said in an e-mailed note.

Gold assets in ETPs declined 1.22 metric tons to 2,083.55 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,097.01 tons on Sept. 30 and are up 16 percent this year.

Prices may gain to $1,400 in three months, $1,525 in six months and $1,650 in 12 months, Goldman Sachs analysts David Greely and Damien Courvalin wrote in a report dated yesterday.

“With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb,” the New York-based analysts wrote.

Silver for immediate delivery in London fell 1.3 percent to $22.99 an ounce, after yesterday reaching $23.6325, the highest price since 1980.

Platinum lost 0.7 percent to $1,674.75 an ounce, and palladium declined 1.9 percent to $576.75 an ounce. The metal last week reached a nine-year high of $604.

--Editors: John Deane, Dan Weeks.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Wendy Pugh in Melbourne at wpugh@bloomberg.net.

To contact the editor responsible for this story: Carpenter at ccarpenter2@bloomberg.net.

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