Crude oil traded near $82 a barrel in New York after rising on optimism fuel demand will increase amid improved prospects for an economic recovery in the U.S., the world’s biggest energy consumer. “The EIA data tends to suggest that oil demand in the U.S. is recovering, particularly gasoline, but it’s still at low levels,” said David Moore, commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. Crude oil “went below the $80 level and it attracted a bit of buying at that lower level.” Crude oil for May delivery was at $81.50 a barrel, down 10 cents, in electronic trading on the New York Mercantile Exchange at 12:54 p.m. Singapore time. Yesterday, the contract rose 63 cents to settle at $81.60. April futures expired yesterday.
The dollar traded at $1.3559 per euro at 12:56 a.m. in Singapore, from $1.3558 yesterday. Europe’s common currency rose from a three-week low as European leaders tried to allay concerns that they were unprepared to aid Greece. “There was a bit of benefit from currency movements and a bit of positive sentiment from the equities markets for oil,” Moore said.
Higher profits for making gasoline are prompting refiners to increase production of the motor fuel to a record for this time of year even as total operating rates decline to an all- time low. The hypothetical profit margin, or crack spread, for refining crude oil into gasoline has almost doubled this year to more than $13 a barrel, according to futures prices. The spread was at $13.116 a barrel at 12:56 p.m. Singapore time. Gasoline inventories probably declined 1.75 million barrels from 227.3 million the previous week, according to the median of 10 estimates before an Energy Department report. The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow. “I don’t see with the fundamentals that oil prices should be squeezed dramatically higher,” Moore said.
Oil dropped as much as 2.6 percent yesterday and the U.S. currency rose to the highest level since March 2 after German Chancellor Angela Merkel said investors shouldn’t expect a European Union summit this week to agree on aid for Greece. Crude oil also came under pressure as China, the world’s fastest-growing energy consumer, said that record oil imports in February boosted its stockpiles by 5.2 percent from January. The Organization of Petroleum Exporting Countries has spare production capacity of more than 6 million barrels a day, Germanico Pinto, OPEC’s president and Ecuador’s oil minister, said at a conference yesterday in Geneva. That’s a “comfortable cushion of spare capacity,” he said. The group controls about 40 percent of global crude supply.
Brent crude for May settlement traded at $80.44 a barrel, down 10 cents, on the ICE Futures Europe exchange in London at 12:56 p.m. Singapore time. Yesterday, the contract gained 66 cents, or 0.8 percent, to $80.54.