Oil Futures Fall a 5th Day as U.S. Stockpiles Rise

Oil traded near the lowest in six weeks as U.S. crude stockpiles increased more than estimated and gasoline use fell to a 10-year low. Brent crude in London was at the biggest premium to New York prices in 12 weeks.

Futures fluctuated today after declining as much as 0.6 percent in early trading. They settled yesterday at the lowest price in six weeks after an Energy Department report showed crude supplies in the U.S. rose by 4.2 million barrels last week. Inventories were projected to increase 2.6 million barrels, according to a Bloomberg News survey.

“Oil appears to be driven by U.S. domestic factors, the larger-than-expected increase in crude stockpiles and the fall in gasoline demand,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “In the short-term, it flies in the face of the run of reasonably positive data from the U.S.”

Crude for March delivery was at $97.40 a barrel, down 21 cents, in electronic trading on the New York Mercantile Exchange at 12:55 p.m. Singapore time. The contract fell 0.9 percent yesterday to $97.61 a barrel, the lowest since Dec. 20. Prices are down 1.4 percent this year.

Brent oil for March settlement gained 23 cents, or 0.2 percent, to $111.79 a barrel on the London-based ICE Futures Europe exchange. It rose 58 cents yesterday to $111.56, the highest close since Jan. 11. The European benchmark contract’s premium to West Texas Intermediate futures was at $14.39, the widest since Nov. 11. That compares with a record spread of $27.88 on Oct. 14.

North Sea Oil

Brent’s premium to U.S. crude reflects unrest in Nigeria, Africa’s top oil producer. Nigerian security forces arrested the alleged spokesman of a militant Islamist group blamed for bombings and gun attacks that killed hundreds this year, the State Security Service said yesterday.

“Given the concerns in Nigeria, we can anticipate the potential for this spread to retract lost ground and see it heading back to $15 a barrel,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin in Sydney.

More North Sea oil is being shipped to Asia than at any time in the past eight years as prices fall to the lowest levels in 15 months compared with Middle East alternatives, according to shipping data.

Companies led by BP Plc and Vitol Group have sent at least 8 million barrels of North Sea oil to Asian ports since mid- December, equivalent to six days of U.K. production, according to ship-tracking data from AISLive Ltd. That’s the most for any month since 2004, data from Galbraith’s Ltd., a London-based shipbroker, show.

Fuel Supplies

In the U.S., gasoline consumption decreased to 7.97 million barrels a day, the lowest since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed. They were projected to rise 500,000 barrels, according to the median of 12 analyst estimates in the Bloomberg News survey.

Distillate inventories, a category that includes heating oil and diesel, dropped by 135,000 barrels, the U.S. report showed. They were estimated to decline 1.38 million barrels, according to the survey.

Oil initially climbed yesterday in New York after data from the Institute for Supply Management showed manufacturing in the U.S. grew in January at the fastest pace in seven months. The Tempe, Arizona-based group’s manufacturing index rose to 54.1 from 53.1 in December. The median forecast of economists surveyed by Bloomberg News was 54.5.

‘Mixed Bag’

“Oil futures were a mixed bag, despite being encouraged by the unexpected rise in global manufacturing activity early in the session,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. The inventory data “showed a substantially larger than expected increase in crude stocks.”

The United Steelworkers union and Royal Dutch Shell Plc averted a potential strike earlier this week that would have idled as many as 69 refineries by tentatively agreeing to a new three-year contract.

The proposal includes pay increases of 2.5 percent in the first year and 3 percent in the second and third years, along with some of the improvements in safety language sought by the union, according to three labor representatives with direct knowledge of the negotiations.

Slowdown in China

In China, net crude-oil imports may grow at the smallest pace in at least six years in 2012 as the world’s second-biggest economy slows, estimates released by state-owned China National Petroleum Corp. show.

China, the world’s second-largest oil user, may raise retail fuel prices for the first time since April following gains in the crude grades the government tracks.

The moving average of Brent, Dubai and Indonesia’s Cinta crudes, the three types in the country’s pricing basket, over the past 22 working days climbed 4.3 percent as of yesterday, according to C1 Energy, a commodity researcher based in Shanghai. That’s above the 4 percent target that could trigger a fuel adjustment by the National Development and Reform Commission, China’s top economic regulator.

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