OIL FUTURES: Nymex Crude Down Slightly As Demand Weakens
11/05/2009 08:49AM
Bookmark
Subscribe
NEW YORK (Dow Jones)--Crude futures slipped Thursday as concerns about weak demand countered an expected higher opening for U.S. equities.
Light, sweet crude for December delivery recently traded 17 cents, or 0.2%, lower at $80.23 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 20 cents, or 0.3%, lower at $78.69 a barrel.
Futures have held above $80 a barrel, but by early Thursday, the surprise draw in U.S. oil inventories that pushed prices above that level had come to be seen as at best sending a mixed signal about the state of global demand. Oil inventories fell by 3.9 million barrels, according to the Department of Energy, where analysts had unanimously predicted an increase in a Dow Jones survey. But the decline came as refiners were cutting back on oil imports due to weak demand, meaning storage levels likely rose overseas even as U.S. stockpiles fell.
Products supplied, a measure of demand, was down 4.5% in the four weeks ended Oct. 30, compared with a year earlier, the Energy Department said.
"What a lot of people missed yesterday in the report was that demand is not getting better, it's getting worse," said Peter Beutel, president of the trading advisory firm Cameron Hanover.
The pessimism about oil demand was enough for the market to run counter to movements in the dollar and U.S. equities, which have both held sway over crude futures for much of the last year.
Investors convinced that the world economy is setting up for a quick recovery have sold out of the dollar and bought into the rally that's carried equities and certain commodities, including oil, to 2009 highs recently.
But improvements in certain indicators--including a bigger-than-expected drop in new U.S. jobless claims Thusrday--haven't translated into a rebound in oil demand. On days when equities look to trade only mildly higher, the pull isn't always enough to carry oil along.
The same holds true for the dollar, which fell sharply on Wednesday, but appeared to be holding the line at about $1.49 to a euro.
"The bulls need to rely on a progressively weaker dollar to keep the rally going," wrote Ed Meir, with MF Global, adding that Wednesday's decision by the Federal Reserve to keep interest rates "exceptionally low" should keep the dollar slidng.
Front-month December reformulated gasoline blendstock, or RBOB, recently traded 32 points, or 0.2%, lower at $2.0095 a gallon. December heating oil traded 36 points, or 0.2%, lower at $2.0866 a gallon.
-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com.