Brent Rises After Closing at Four-Month Low
Brent crude rose amid speculation yesterday’s 3.2 percent slide was exaggerated given efforts by central banks around the world to revive their economies.
Brent climbed as much as 0.9 percent in London, after a decline that drove it to its lowest settlement in four months. West Texas Intermediate swung between gains and losses after yesterday posting its steepest loss this year following data showing U.S. stockpiles rose to the most in almost 23 years.
“Today is the day after the day before, where the most likely move is a retracement from the losses yesterday,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said today by phone. “Yesterday there was weaker U.S. data, high oil inventories and negative performance on the stock market, all three of which pulled the rock from underneath the crude price.”
Brent for May settlement on the London-based ICE Futures Europe exchange was at $107.53 a barrel, up 42 cents, at 1:25 p.m. London time. It fell to $107.11 yesterday, the lowest closing price since Dec. 7. The volume of all futures traded was 42 percent higher than the 100-day average. Brent is down 3.1 percent this year.
WTI for May delivery fell 19 cents to $94.26 a barrel in electronic trading on the New York Mercantile Exchange. Trading was 2.8 percent above the 100-day average. The contract dropped $2.74, or 2.8 percent, to $94.45 yesterday, the biggest decline since Nov. 20 and the lowest closing price since March 22. The European benchmark grade was at a premium of $13.27 to WTI futures, compared with $12.66 yesterday.
The Bank of Japan (8301) said today it will purchase 7.5 trillion yen ($78.6 billion) of bonds a month and double the monetary base in two years. HSBC Holdings Plc and Nomura Securities Co. said the easing is the nation’s biggest yet. The European Central Bank left its benchmark rate at a record low and the Bank of England maintained bond purchases at 375 billion pounds ($568 billion), both of which were in line with surveys.
Brent rebounded after reaching technical support yesterday along the so-called neckline of a “head-and-shoulders” chart pattern, according to data compiled by Bloomberg. Futures halted declines in January and March along this line, which is around $106.70 a barrel today. Buy orders tend to be clustered near chart-support levels, while losses may accelerate when a support level is breached.
Brent will average $112 a barrel this year, Barclays Plc said yesterday in an e-mailed report, reducing its forecast from $125, which had been the highest of all analyst forecasts compiled by Bloomberg. WTI will average $95 this year, compared with a previous prediction of $108, according to the bank.
“In the short term, Brent is likely to move toward the $108.70 area with $108.90 the highest we can reach as a potential retracement,” Hansen said.
U.S. inventories rose by 2.7 million barrels to 388.6 million last week, the highest since 1990, the Energy Information Administration said yesterday. They were projected to gain 2.1 million barrels, according to a Bloomberg News survey. Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, dropped by 287,000 barrels to 49.2 million last week. They rose to a record 51.9 million in January.
The International Energy Agency sees a “more comfortable supply balance” in the medium term, Maria van der Hoeven, the agency’s executive director, said today at a conference in Paris.
U.S. gasoline stockpiles fell 572,000 barrels to 220.7 million last week, the lowest since December, according to the EIA. Supplies of distillate fuel, including diesel and heating oil, slid 2.3 million barrels to 113 million, the data showed.
Refineries operated at 86.3 percent of capacity last week, the highest rate in two months, the EIA reported. Processing units are traditionally restarted in the spring after being idled for maintenance in late winter as production shifts away from heating oil and before the peak season for gasoline consumption.
The Norwegian Energy Industry union warned that failure to reach an agreement in current wage talks may shut as many as 20 platforms in the North Sea.
The union could pull as many as 1,559 workers off the job starting at 6 a.m. on April 8, it said in a statement.
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