Oil Declines in Longest Losing Streak Since March on Stockpiles, U.S. Jobs

Oil declined for a third day in New York, the longest losing streak since March, as rising U.S. supplies and signs of slowing job growth stoked speculation fuel demand may weaken in the world’s biggest crude consumer.

Futures dropped as much as 0.7 percent today after the American Petroleum Institute said crude inventories climbed for a fifth week. Stockpiles probably increased from the highest since November, according to a Bloomberg News survey before an Energy Department report today. Data this week may show the U.S. generated fewer jobs in April than in March.

“We’re still continuing to see the builds” in inventories, said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 this year. “The litmus test will be the employment data due out on Friday.”

Crude for June delivery fell as much as 82 cents to $110.23 a barrel in electronic trading on theNew York Mercantile Exchange. The contract was at $110.58 at 3 p.m. Singapore time. Yesterday, it decreased $2.47, or 2.2 percent, to $111.05, the biggest drop since April 18. Prices have advanced 34 percent in the past year.

Brent crude for June settlement on the London-based ICE Futures Europe exchange slipped as much as 73 cents, or 0.6 percent, to $121.72 a barrel. Yesterday, the contract lost $2.67, or 2.1 percent, to $122.45, the biggest drop since April 12.

U.S. Jobs

U.S. employment increased by 198,000 workers in April, after a 201,000 gain in March, according to a Bloomberg News survey of economists before a report today from ADP Employer Services. Labor Department data on May 6 may show payrolls rose by 185,000 workers last month after 216,000 a month earlier, a separate poll showed.

Oil also declined as China’s central bank signaled more tightening is possible as the country seeks to manage inflation, the People’s Bank of China said in a monetary report published yesterday. Concerns output may slow in the world’s second- largest economy pushed Asian stock markets lower today.

A manufacturing index in China fell in April from March after increases in bank reserve requirements and interest rates.

“If this is the new trend it will certainly have an impact on global oil demand as the emerging market world represents about 80 percent of global oil demand growth,” Dominick Chirichella, a senior partner at the Energy Management Institute in New York, said in a note yesterday.

Oil Supplies

U.S. crude inventories rose 2 million barrels in the week to April 29 from 363.1 million, according to the median estimate from 15 analysts surveyed by Bloomberg News. Gasoline stockpiles are expected to have slipped 500,000 barrels from 205.6 million, which would be an 11th weekly decline.

Yesterday, the industry-funded American Petroleum Institute said crude stockpiles rose 3.2 million barrels and gasoline supplies climbed 680,000 barrels.

The Energy Department will release its Weekly Petroleum Status Report at 10:30 a.m. inWashington.

Open interest in New York futures yesterday reached a record for a second session. There were 1.63 million outstanding contracts of light, sweet crude, surpassing a high of 1.608 million set on April 29, said Chris Grams, a spokesman for the exchange. The previous record was 1.606 million on March 11.

Oil options volatility increased for a third day after the death of al-Qaeda leader Osama bin Laden on May 1. Implied volatility for at-the-money options expiring in June, a measure of expected price swings in futures and a gauge of options prices, was 28.9 percent today, up from 28 percent yesterday.

The killing of bin Laden by U.S. forces in Pakistan may lead to retaliatory attacks by al-Qaeda supporters. Bin Laden targeted oil facilities as a way to damage the U.S. and European economies. Saudi Arabian forces foiled the biggest attempted attack in 2006 on the Abqaiq oil-processing center, which handles two-thirds of the kingdom’s supply.

(Source: http://www.bloomberg.com/news/2011-05-03/oil-heads-for-longest-losing-streak-since-march-as-crude-stockpiles-rise.html)