Oil rises on weak economic data

Oil rises on weak economic data

Weakness in US gasoline futures weighed on oil prices o n W ednesday after data showed a sharp rise in US refined products inventories, while disappointing euro zone and US economic data hurt sentiment about energy demand.

Helping lift crude from the lows were a bounce back into positive territory by stocks on Wall Street, Middle East turmoil and a remark by US President Barack Obama to business leaders that a budget deal was possible within about a week if Republicans compromise on taxes.

But it was not enough to offset pressure from the euro, which slipped from a seven week high after a disappointing Spanish bond auction and on weak euro zone economic data.

Euro zone retail sales fell 1.2 per cent in October from September, the biggest drop since April, the EU's statistics office Eurostat said on Wednesday, worse than the 0.1 per cent fall forecast by economists in a Reuters poll.

"It's a stalemate. There was some hopeful data from the US last week and positive noise from China (this week), but Europe's a big worry," said Richard Langkemper, an analyst at Argos North Sea Group in Rotterdam.

Brent January crude fell 53 cents to $US109.31 a barrel by 1:06 p.m. EST (1806 GMT), having fallen as low as $US108.65. The session peak of $US110.57 was a penny below the 50-day moving average.


US January crude was down 30 cents at $US88.20 a barrel, having swung from $US87.46 to $US89.05. That price trajectory took crude futures either side of the 50-day moving average of $US88.43.

US gasoline futures fell more than 1 per cent, while heating oil was down only about 0.2 per cent.

US private-sector employers added 118,000 jobs in November, shy of economists' expectations, a report by a payrolls processor showed.. Tepid private-sector hiring could portend disappointing demand for petroleum products.

The government's report on US November nonfarm payrolls is due on Friday.

US oil inventories

While US crude oil inventories fell more than forecast last week, refined product stocks increased far more than expected as refinery runs jumped, data from the Energy Information Administration showed on Wednesday.

US inventories of gasoline last week swelled by the most in a week since September 2001, as refinery utilization jumped 2 per centage points.

"The report is solidly bearish and a welcomed development for consumers," said John Kilduff, partner at Again Capital in New York.

"The spike in gasoline inventories clears any of the remaining concerns about supplies from Hurricane Sandy.

"The decline in crude oil inventories, while not small, is a footnote to this report, as gasoline prices will continue to be pressured lower as supplies continue to trend higher," he added.


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