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WTI Crude Retreats to Pare Biggest Weekly Gain Since June

West Texas Intermediate fell for the first time in seven days amid speculation the biggest weekly advance since June was excessive.

Futures slid as much as 0.9 percent after failing to settle above a technical-resistance level, paring this week’s advance to 5.9 percent. Prices may rise next week on speculation that the European Central Bank will cut its key interest rate to a record low, a Bloomberg News survey showed. Brent crude’s premium to WTI shrank to its narrowest since January.

“Market sentiment is still bearish,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Crude markets tend to overshoot and we do not expect deep and sustained losses here.”

WTI for June delivery declined as much as 81 cents to $92.83 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.18 as of 1:36 p.m. London time. The contract climbed $2.21 to $93.64 a barrel yesterday to its highest close since April 10, capping the longest rising streak since July.

Brent for June settlement on the London-based ICE Futures Europe exchange fell as much as 85 cents, or 0.8 percent, to $102.56 a barrel. The European benchmark grade’s premium to WTI shrank to as little as $9.51 today, the least since Jan. 19, 2012. The spread slipped to less than $10 yesterday for the first time in 15 months. It closed at a record $27.88 in October 2011.

Brent-WTI

The Brent-WTI spread, the most widely traded commodity futures differential, has narrowed amid the restoration of North Sea crude output, lower global demand estimates and waning concern that Middle East tension will disrupt supplies. WTI has risen this year as expanded pipeline capacity helps relieve a glut at the storage hub in Cushing, Oklahoma, the delivery point for New York-traded contracts.

Prices were little changed by weaker-than-forecast economic growth in the U.S. The world’s largest economy grew at a 2.5 percent annual rate in the first quarter, Commerce Department figures showed today in Washington. The median estimate of 86 economists surveyed by Bloomberg called for a 3 percent gain.

Oil slipped even as Nigeria’s loading program for June showed that Africa’s biggest producer won’t ship any cargoes of its benchmark Bonny Light grade. The country’s exports of other crudes will total 61 cargoes, the least since March 2010, according to plans obtained by Bloomberg News. Royal Dutch Shell Plc (RDSA) shut the Nembe Creek pipeline for repairs on April 15 and invoked force majeure, a legal clause to suspend deliveries, for Bonny Light.

Moving Average

WTI’s rally this week has stalled as futures approach technical resistance along their 100-week moving average, according to data compiled by Bloomberg. The front-month contract yesterday traded higher than this indicator, about $93.50 a barrel today, without settling above it. Sell orders tend to be clustered near chart-resistance levels.

CME Group Inc., which owns the Nymex, reduced the initial margin for speculators on front-month WTI futures by 8.8 percent to $4,510 per contract. The change takes effect after the close of business on April 30 and follows a review of market volatility to “ensure adequate collateral coverage,” it said yesterday in a notice to customers.

WTI will increase through May 3, according to 16 of 40 analysts and traders, or 40 percent, surveyed by Bloomberg. Fifteen respondents, or 38 percent, predicted there will be little change and nine projected a decline. Last week, 48 percent of survey respondents projected prices will fall.

Banks including Nomura International Plc, UBS AG and Royal Bank of Scotland Group Plc (RBS) are forecasting that the ECB will cut its main refinancing rate to 0.5 percent at a meeting on May 2 after gauges of European manufacturing and services for April showed weakness. The European Union accounted for 16 percent of the world’s oil consumption in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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