July 23 (Bloomberg) -- Crude oil dropped after approaching an 11-week high, on speculation that rising U.S. inventories will signal that prices have risen too fast.
Oil has gained 3.7 percent this week as global stock markets rallied on growing optimism about the world’s economy. Prices may fall next week on speculation that U.S. inventories will climb as imports increase, a Bloomberg News survey showed. Tropical Storm Bonnie is forecast to move into the Gulf of Mexico, according the National Hurricane Center.
“We are now at the upper end of the trading range and should come off, unless something unexpected happens,” said Carsten Fritsch, a Commerzbank AG analyst in Frankfurt. “Fundamentals still look pretty poor and don’t justify prices close to $80.”
Crude for September delivery dropped as much as 51 cents, or 0.6 percent, to $78.79 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $78.85 at 1:04 p.m. in London. Yesterday, the contract rose as high as $79.42, the highest price since May 5, as stock markets advanced.
Brent crude for September settlement on the London-based ICE Futures Europe exchange traded at $77.39, down 43 cents. Yesterday, the contract jumped $2.45, or 3.3 percent, to $77.82, the highest settlement since June 25.
The U.S. Energy Department said on July 21 U.S. crude stockpiles grew by 360,000 barrels last week. Gasoline inventories climbed 1.12 million barrels to 222.2 million barrels, the highest level since April.
Thirteen of 34 analysts, or 38 percent, forecast crude oil will decline through July 30. Eleven respondents, or 32 percent, predicted that futures will be little changed and 10 saw an increase. Last week 39 percent of analysts forecast a drop.
Tropical Storm Bonnie
Tropical Storm Bonnie hit the Bahamas and was on a track to take it across or near southern Florida and into the Gulf of Mexico, according to the U.S. National Hurricane Center.
The Gulf accounts for about 31 percent of U.S. oil output and 10 percent of its natural-gas production, according to the Energy Department. The coast along Louisiana and Texas is home to 42 percent of U.S. refining capacity.
“The tropical storm should keep oil prices bubbling today if it continues to strengthen and remain on track,” David Hufton, managing director of London’s PVM Oil Associates Ltd., said in a note. “The stock markets are a different matter. They will certainly bubble but there may be some evaporation as the day progresses.”
European stocks rallied for a fourth day and U.S. futures gained as economic reports showed improvement in Britain and Germany. The Stoxx Europe 600 Index gained 0.4 percent as of 1:06 p.m. in London. Standard & Poor’s 500 Index futures rose 0.4 percent.