Futures retraced some of yesterday’s 2.3 percent gain after output at U.S. plants, mines and utilities fell 0.2 percent, the first decrease since the recession ended in June 2009, according to figures from the Federal Reserve. Crude inventories climbed 1.5 million barrels last week, according to the median of nine analyst estimates before an Energy Department report tomorrow.
“The fundamentals haven’t really improved by a great deal,” said Serene Lim, a commodity analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Inventories have been on the high range of the five year average so there is substantial supplies.”
The November contract lost as much as 36 cents, or 0.4 percent, to $82.72 a barrel in electronic trading on the New York Mercantile Exchange, and was at $82.93 at 1:23 p.m. Sydney time. Yesterday it increased $1.83 to $83.08, the highest settlement since Oct. 6. Prices are up 4.5 percent this year.
The more-actively traded December contract slipped as much as 43 cents, or 0.5 percent, to $83.37.
“We’re probably seeing a bit of profit-taking today with $83 being a strong resistance level,” said Lim at Australia & New Zealand Banking Group.
Oil surged yesterday after a strike in France curbed fuel supplies. French truckers blocked highways and officials said they would use police to prevent strikers from cutting the delivery of fuel as the standoff hardened over President Nicolas Sarcozy’s plans to raise the retirement age to 62.
September output at U.S. factories, mines and utilities slipped 0.2 percent, the first decrease since the recession ended in June 2009, according to figures from the Fed yesterday.
Confidence among U.S. homebuilders rose in October to the highest level in four months, a sign residential construction is steadying near record lows, a report from the National Association of Home Builders/Wells Fargo also showed.
“The housing confidence numbers were certainly welcome, but the industrial production read indicated renewed weakness in manufacturing - a sector critical to the early stages of recovery,”David Taylor, a market analyst at CMC Markets Ltd. in Sydney, said in an e-mailed note today. “It’s clear from this data set that the U.S. is still very much in need of a walking frame, and that will no doubt come in the form of more quantitative easing.”
Refineries operated at 81.9 percent of capacity in the week ended Oct. 8, the lowest level since March, a report from the Energy Department showed last week. Companies idle units for maintenance in September and October as gasoline demand drops and before heating-oil use increases.
Brent crude for December settlement fell as much as 58 cents, or 0.7 percent, to $83.79 a barrel on the ICE Futures Europe exchange.
“Crude oil shouldn’t be at this level,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Industrial production is not moving and this was supposed to be a manufacturing-led recovery.”