Oil fell to the lowest level in almost seven months after an Energy Department report showed that U.S. crude supplies rose to a 22-year high and as European leaders gather to discuss the euro-region’s debt troubles.
Futures fell as much as 1.8 percent as the department said stockpiles climbed 883,000 barrels to 382.5 million barrels last week, the most since August 1990. The European summit is the 18th since Greece was shaken by debt and the first since an anti-austerity campaign carried Francois Hollande to France’s presidency. The euro sank to the lowest level in almost two years.
“I’m looking for prices to fall to the mid-$80 and eventually test last summer’s low of near $75,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in Chicago. “We’re heading lower because supplies continue to rise and the dollar is surging against the euro, hurting all commodities.”
Crude oil for July delivery fell $1.25, or 1.4 percent, to $90.60 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Futures touched $90.18, the lowest level since Nov. 1. Oil traded at $90.71 a barrel before release of the inventory report at 10:30 a.m. in Washington.
Brent oil for July settlement fell $1.89, or 1.7 percent, to $106.52 a barrel on the London-based ICE Futures Europe exchange. The European-benchmark contract touched $105.92, the lowest level since Dec. 20.
U.S. crude inventories were forecast to gain 1.65 million barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.
Fuel Supplies
Gasoline inventories fell 3.3 million barrels to 201 million last week, the Energy Department said today. Stockpiles of distillate fuel, a category that includes heating oil and diesel, fell 309,000 barrels to 119.5 million.
German Chancellor Angela Merkel is facing calls for measures she opposes, including euro bonds, the use of European money to recapitalize banks, a bigger rescue fund and extra time for debt-swamped countries to cut spending.
“The moves in just about all the markets are related to what’s going on in Europe,” said Phil Flynn, an analyst at futures brokerage PFGBest in Chicago. “There’s a little bit of optimism that the Iran talks will succeed.”
The International Atomic Energy Agency will be given access to Iran’s Parchin military complex, Director General Yukiya Amano said yesterday. World powers resumed talks with officials from the Islamic republic in Baghdad today. Iran is suspected by the U.S. and its allies to have worked on the trigger for an atomic bomb at Parchin.
The Baghdad talks between Iran and the U.S., U.K., France, Russia, China and Germany follow an April 14 gathering in Istanbul where the sides failed to produce an accord. Discussions last month were described as “constructive.” The talks will extend into a second day tomorrow, Iranian state-run Press TV reported without saying where it got the information.
