business

By Alexander Kwiatkowski and Christian Schmollinger

Oil fell from a two-month high in New York on speculation U.S. stockpiles gained last week because of lower demand in the world’s largest crude consumer.

Crude oil inventories climbed 1 million barrels in the week ended March 13 from 351.3 million barrels, according to estimates in a Bloomberg survey before an Energy Department report tomorrow. Oil also dropped as European stocks fell for the first time in six days.

“We have very high crude oil inventories in the U.S.” said Sintje Diek, an HSH Nordbank analyst in Hamburg. “We still have very weak oil demand. We will remain in this trading range of $45 to $50 a barrel for the coming weeks.”

Crude oil for April delivery fell as much as 82 cents, or 1.7 percent, to $46.53 a barrel in electronic trading on the New York Mercantile Exchange. It was at $47.10 a barrel at 9:22 a.m. London time.

Yesterday, April futures rose $1.10 to $47.35 a barrel, the highest settlement since Jan. 6. Prices have gained 5.1 percent this year. Crude in New York tumbled from a record $147.27 a barrel in July because of the economic contraction in major consuming countries.

European stocks fell after American Express Co. reported rising credit-card defaults. Europe’s Dow Jones Stoxx 600 Index dropped 2 percent to 171.22 at 8:47 a.m. in London, ending a five-day, 9.6 percent surge.

The Organization of Petroleum Exporting Countries deferred another production cut for at least 11 weeks at its weekend meeting. OPEC has reduced daily output targets by 4.2 million barrels since September to prevent a glut and slow the decline in prices. The group is scheduled to meet again on May 28.

Brent Crude

Brent crude oil for May settlement fell as much as $1.24, or 2.7 percent, to $45.22 a barrel, and was trading at $45.97 on London’s ICE Futures Europe exchange at 9:23 a.m. in London.

Saudi Arabia, the world’s biggest oil exporter, is the only member to cut more output than agreed last year, according to a monthly OPEC report released on March 13. Iran and Nigeria have made good on only about half of their promised reductions, the report showed.

Saudi Arabia is willing to keep oil output below its OPEC quota level of about 8 million barrels a day unless consumers want more, Saudi Arabian Oil Minister Ali al-Naimi said yesterday.

“Maybe we will see even lower prices because OPEC decided not to make further cuts,” said Diek of HSH Nordbank. “Maybe compliance is not enough.”

source: Bloomberg

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Bank of America Could Get Billions in Additional Government Money

The U.S. government is nearing a deal to inject Bank of America Corp. with billions of dollars in more aid, The Wall Street Journal reported late Wednesday, citing people familiar with the situation.

The nation's biggest bank by assets acquired Merrill Lynch & Co. on Jan. 1. Bank of America received $25 billion from the government's $700 financial rescue fund, including $10 billion that would have gone to Merrill had it not been acquired.

Bank of America and the U.S. Treasury spokesmen declined to comment in response to inquiries made by The Associated Press.

The Journal, citing a person familiar with the talks, reported that the discussion between the government and Bank of America began in mid-December when the Charlotte, N.C., bank said it wasn't likely to go through with its acquisition of New York-based Merrill because the losses at the troubled company were larger than expected.

Treasury Department officials grew concerned that the stability of the U.S. financial markets would be at risk if the deal fell apart, the newspaper reported. Officials said they would work on "formulation of a plan" that includes new money from the government, the Journal said, citing the person familiar with the talks.

Details of a possible agreement, the Journal said, are likely to come out with the company's quarterly results, which are expected Tuesday.


The Journal reported that any possible plan could shield Bank of America from the bad assets on Merrill's books. One person familiar with the situation told the paper that there could be a limit to how much Bank of America might have to be liable for, with the government covering the remainder.

Banks are struggling to mend their balance sheets after bad bets on mortgages spread to other forms of debt. Some analysts and economist are saying the U.S. government will have to spend far more than the $700 billion it has already approved to aid the financial industry. Only the first half of the $700 billion has been allocated and Congress has not released the second half of the fund.

source :ABC news

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