Crude oil rose in New York as traders bought contracts to close out bets that prices would decline amid the global economic recession.
Market participants who held short positions, or bets that prices would fall, are purchasing futures after oil for March delivery dropped 23 percent over the preceding 10 trading days. U.S. crude oil inventories probably increased for the 15th time in the past 17 weeks, a Bloomberg survey showed.
“What we’re seeing is a bit of short-covering,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “I don’t expect this to be any other than a short- term rally, a bit of a dead-cat bounce. Without any new news it will be short-lived.”
Crude oil for March delivery rose as much as 62 cents, or 1.5 percent, to $41.46 a barrel in electronic trading on the New York Mercantile Exchange. It was at $41.11 a barrel at 9:46 a.m. Singapore time. Futures are down 54 percent from a year ago.
The February contract expired yesterday up $2.23, or 6.1 percent, at $38.74 a barrel, the biggest gain since Dec. 31. Sales volume in the contract was less than March as traders avoided taking supplies at the Cushing, Oklahoma, delivery point for Nymex futures.
Crude oil stockpiles at Cushing, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels during the week of Jan. 9, the Energy Department said last week. It was the highest since at least April 2004, when the department began keeping records for the location. Total capacity there is 47.7 million barrels, according to data from Lipow Oil Associates LLC.
Inventories Gain
U.S. crude inventories probably rose 1.5 million barrels last week, according to the median of analyst estimates in a Bloomberg News survey. The Energy Department is scheduled to release its weekly inventory report on Jan. 22, a day later than usual because of the Jan. 19 Martin Luther King Jr. holiday.
Gasoline stockpiles increased 2.25 million barrels from 213.5 million, according to the survey. Supplies ofdistillate fuel, a category that includes heating oil and diesel, probably declined 1 million barrels from 144.2 million.
Two geopolitical crises that bolstered prices earlier this month appear to have been resolved since Jan. 16.
Russia and Ukraine signed 10-year natural-gas contracts, ending a dispute that squeezed supplies to the European Union for almost two weeks. Shipments resumed yesterday. More than 20 European countries were affected, as 80 percent of Russian gas exports pass through Ukraine’s pipeline network.
Israel began pulling its troops from the Gaza Strip after it declared a unilateral truce Jan. 18, ending a military operation to stop Hamas and other Palestinian militant groups from shooting rockets into the country. The fighting began on Dec. 27.
Concern that the unrest would disrupt Middle East supplies has helped bolster prices this month.
