USD 92.5919

+0.02

EUR 100.2704

-0.14

Brent 86.62

+0.93

Natural gas 1.74

+0.02

604

Oil Declines From Two-Year High

Oil declined in New York for the first time in seven days as analysts forecast U.S. crude inventories climbed to the highest in 18 months and a strengthening dollar curbed the appeal of commodities

Oil Declines From Two-Year High

Futures dropped before an Energy Department report tomorrow that may show crude stockpiles in the U.S., the world’s largest oil user, increased 1.75 million barrels last week from 368.2 million, according to a Bloomberg News survey of analysts. That would take them to the highest level since May 2009. The dollar climbed to a one-week high against the euro.

“The last couple of days have shown that maybe the rally is running out of steam,” said Victor Shum, a senior principal at U.S. energy consultants Purvin & Gertz Inc. in Singapore. “The fundamentals have been weak in the U.S.”

Crude for December delivery fell as much as 62 cents, or 0.7 percent, to $86.44 a barrel in electronic trading on the New York Mercantile Exchange. It was at $86.84 at 3:45 p.m. Singapore time. Yesterday, the contract rose 21 cents to $87.06, the highest settlement since Oct. 8, 2008.

Futures, which surged 78 percent in 2009, have gained 9.4 percent this year. Prices rallied in the past six days, matching the longest rising streak since April.

The dollar increased for a third day versus the euro as speculation that European nations will struggle to raise funds reduced demand for the region’s assets.

Inverse Correlation

Oil has increasingly moved in the opposite direction to the dollar. New York crude futures showed a correlation of minus 0.79 with the currency today, dropping from 0.54 on May 4, according to data compiled by Bloomberg. A correlation of minus 1 means the two moved in opposite directions and 1 signals they moved in tandem.

“There continues to be the inverse correlation between the U.S. dollar movements and the oil price,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Crude stocks are still relatively high.”

U.S. crude stockpiles have increased for three weeks to 14 percent above the five-year average level, as refiners cut processing to the lowest rate since March, the Energy Department said last week.

Gasoline inventories probably decreased 1 million barrels in the week ended Nov. 5 from 212.3 million, according to the Bloomberg News survey. Distillate fuel stockpiles, including heating oil and diesel, are expected to have fallen 2.1 million barrels from 164.9 million, the survey showed.

The Energy Department will release its Weekly Petroleum Status Report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute will publish its own data today.

Relative Strength

Oil declined as a technical indicator used by traders signaled a change in price direction. The December contract’s 14-day relative strength index is above 67 today, according to data compiled by Bloomberg. A reading near 70 indicates a price is set to retreat, while 30 suggests it may recover.

Brent crude for December delivery declined as much as 46 cents, or 0.5 percent, to $88 a barrel on the London-based ICE Futures exchange. Yesterday, the contract rose 35 cents, or 0.4 percent, to settle at $88.46.


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