Oil dropped for the first time in seven days following the forecast of increased US crude inventories to be released tomorrow by Energy Department.
Stock traders said that futures dropped because of the anticipation on the Weekly Petroleum Status Report by the Energy Department, which is to be released at 10:30 a.m. tomorrow in Washington. However, the industry funded American Petroleum Institute will publish its own data today.
Previous reports said that Energy Department will reveal an increase of crude stockpiles in the United States, which is the largest oil used in the world. According to the source, US crude inventories have increased by 14 percent or 1.75 million barrels from last week's 368.2 million, which is above the five-year average level. This will take them to the highest level since May 2009.
However, surveys showed that gasoline inventories may have decreased by 1 million barrels in the week ended November 5 this year from 212.3 million. Distillate fuel stockpiles, including heating oil and diesel, are expected to decline by 2.1 million barrels from 164.9 million.
On the other hand, based on electronic trading in the New York Mercantile Exchange, crude for December delivery declined by almost 0.7 percent or 62 cents to $86.44 a barrel. While it closed at 2 p.m. in Singapore time at $86.89 a barrel. However, the contract climbed by 21 cents to $87.06 a barrel Monday, which is the highest settlement since October 8, 2008. Brent crude for December delivery, on the other hand, dropped as much as 0.5 percent or 46 cents to $88 a barrel on the London-based ICE Futures Exchange. Contract rose by 0.4 percent or 35 cents to settle at $88.46 a barrel.
In addition, futures rushed forward by 78 percent in 2009 and gained 9.5 percent this year. Prices recovered in the past six days, matching the longest rising run since April this year.
Meanwhile, Victor Shum, senior principal at US energy consultants Purvin & Gertz in Singapore, said that the last two days revealed that somehow the rally is running out of steam. Oil declined as a technical indicator used by traders signifying a change in price direction.
