Brent crude falls by $0.78

The price of oil bounced around yesterday but finished almost where it began. Benchmark US oil gained three cents to settle at US$92.12 a barrel. It rose as high as US$92.85 in the morning after gains in European stocks. But then the price dipped after the US government reported a bigger-than-expected increase in US crude supplies.

Supplies rose by 2.9 million barrels last week. That was almost double what analysts had forecast, according to Platts, the energy information arm of McGraw-Hill Cos. Gasoline supplies also rose. Analysts had predicted a decline. The extra gasoline and oil in storage tends to push prices down, because it suggests that there’s enough to go around, or that demand is low.

Brent crude, which is used to price international varieties of oil, fell 78 cents to finish at US$113.22 per barrel on the ICE Futures exchange in London. In other energy futures trading on the Nymex:
• Heating oil fell almost a penny to US$3.1894 per gallon.
• Natural gas gained 3.3 cents to US$3.47 per 1,000 cubic feet.
• Wholesale gasoline fell 6.4 cents to US$2.7817 per gallon.

Cotton prices jumped four per cent on rumours of tight supplies yesterday, but analysts say the advance may be overdone. Other commodities prices ended mixed. Cotton for December delivery surged three cents, its daily limit, to 77.86 cents per pound. Jack Scoville of Price Futures Group said the gain came on speculative buying and rumors of short supplies.

But Scoville said many traders “remain bearish overall” about cotton prices since more supply should be coming on the market as the harvest proceeds. “Many analysts now think prices will need to go lower to create new demand,” Scoville wrote in a note to clients.

Sharon Johnson of Knight Futures wrote in a note to clients that despite yesterday’s surge, the market still has “overwhelmingly bearish fundamentals.” If prices don’t come down this fall, she said, there will be less potential for gains in the second half of the crop year from February through July.

Metals prices rose broadly.
In December contracts, Gold rose $6.70 to settle at $1,753 an ounce, silver rose 27.3 cents to $33.232 an ounce, palladium rose $14.45 to $653.40 an ounce and high grade copper rose 4.8 cents to $3.748 per pound. January platinum rose $25.30 to $1,670.50 per ounce.