Futures slipped 0.6 percent as Cushing stockpiles rose 1.69 million barrels to 40.3 million last week, the highest level since the Energy Department began gathering data at the hub in 2004. Brent oil traded in London climbed as Libyan leader Muammar Qaddafi stepped up attacks on insurgents.
“Supplies have risen to a record at Cushing, which makes me want to stay away from crude,” said Kyle Cooper, director of research for IAF Advisors in Houston. “WTI has become its own little market, unrelated to what’s happening elsewhere.”
Crude oil for April delivery dropped 64 cents to settle at $104.38 a barrel on the New York Mercantile Exchange. The contract touched $106.95 on March 7, the highest intraday price since Sept. 26, 2008. Futures are up 28 percent from a year ago.
Brent crude oil for April settlement increased $2.88, or 2.5 percent, to end the session at $115.94 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark traded at an $11.56 a barrel premium over New York. Brent exceeded WTI by a record $19.54 on Feb. 21 as Cushing supplies advanced and unrest spread in the Middle East and North Africa. The gap averaged 76 cents last year.
Nationwide crude-oil stockpiles rose 2.52 million barrels to 348.9 million, the Energy Department report showed. A 1 million-barrel increase was projected, according to the median of 15 analyst responses in a Bloomberg News survey.
Gasoline inventories tumbled 5.94 million barrels to 229.2 million, the biggest decline since September 2008, according to the department. Stockpiles were forecast to drop 1.5 million barrels. Supplies of distillate fuel, a category that includes heating oil and diesel, fell 3.98 million barrels to 155.2 million, the lowest level since June.
Gasoline for April delivery surged 8.05 cents, or 2.7 percent, to $3.0272 a gallon in New York. Heating oil for April delivery climbed 5.96 cents, or 2 percent, to end the session at $3.0707 a gallon.
Troops were within 20 kilometers (12 miles) of Ras Lanuf, the western-most town in opposition hands, the Associated Press said. Warplanes sent from Qaddafi’s home region of Sirte struck the Ras Lanuf refinery, the country’s largest, Al Jazeera television said. Libya’s state broadcaster blamed damage in the town on retreating rebels.
Worsening violence in Libya, Africa’s third-largest crude producer after Nigeria and Angola, has cut output by as much as 1 million barrels a day, according to the International Energy Agency. The North African country pumped 1.39 million barrels a day in February, down from 1.59 million the previous month, according to Bloomberg News estimates.
“The fear that unrest may spread to other countries hasn’t gone,” Carsten Fritsch, an oil analyst at Commerzbank AG in Frankfurt, said by phone today. “Fierce fighting in Libya shows no sign of ending, and so there’s little confidence that oil production will return to normal levels in the near future.”
“Investors will remain alert for any news out of Libya and any sign that unrest is spreading elsewhere in the Middle East,” said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York.
In Saudi Arabia, OPEC’s biggest producer, websites have called for a nationwide “Day of Rage” on March 11 and March 20, according to Human Rights Watch. Saudi authorities released 25 people arrested during protests earlier this month in the oil-rich Eastern Province, home to the country’s minority Shiite Muslims, Ibrahim Al-Mugaiteeb, president of the country’s Human Rights First Society, said today.
“The market is being held hostage by the Middle East,” said Philip Silverman, a principal at Kingsview Management LLC, a commodity trading adviser in New York. “All eyes are on Saudi Arabia and what will happen there later this week.”
Saudi Arabia is capable of providing additional oil output if needed to counter supply disruptions caused by the unrest in the region, James Smith, U.S. ambassador to the kingdom, said in an interview on InBusiness with Margaret Brennan. The kingdom has increased oil production by 1 million barrels a day and has the capacity to pump an additional 3.5 million, Smith said
“We do not see, either with a combination of Libya and Algeria, that there’ll be a break in the market such that the Saudis would not be able to offset that loss with their spare capacity,” Smith said.
There’s no need for the Organization of Petroleum Exporting Countries to hold an emergency meeting because there is no shortage of supply, Youcef Yousfi, Algeria’s minister of energy and mines, said at CERAWeek, an IHS Cambridge Energy Research Associates conference in Houston.
Oil volume in electronic trading on the Nymex was 721,281 contracts as of 3:40 p.m. in New York. Volume totaled 959,285 contracts yesterday, 21 percent above the average of the past three months. Open interest was 1.57 million contracts.
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