WTI Fluctuates; Poised for First Weekly Drop in a Month

West Texas Intermediate crude headed for the first weekly decline in a month after U.S. consumption of gasoline and distillate fuels dropped.

Futures fluctuated in New York after rising yesterday by the most in six days. U.S. gasoline consumption shrank 1.2 percent last week and demand for distillate fuels, including heating oil and diesel, decreased 2.4 percent, Energy Department data show. WTI may drop next week amid concern that weaker economic growth will reduce fuel use, according to a Bloomberg News survey.

“We still expect renewed downside pressure,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mail. “Demand is yet to improve ahead of summer” in the U.S. and Europe, he said.

WTI for June delivery was at $95.35 a barrel, up 19 cents, in electronic trading on the New York Mercantile Exchange at 10:27 a.m. London time. The volume of all contracts traded was 1.8 percent below the 100-day average. Prices rose 86 cents to $95.16 yesterday, the highest close since May 13. They are down 0.7 percent this week.

Brent for July settlement rose 28 cents to $104.08 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $8.45 to WTI futures for the same month, down from $8.64 yesterday. The spread closed at $9.38 on May 15, the widest since April 26.

Moving Average

Eighteen of 35 analysts and traders surveyed by Bloomberg forecast WTI will drop through May 24. Seven respondents, or 20 percent, predicted a gain. Ten said there would be little change. Last week, 46 percent of analysts projected a decline.

WTI’s 200-day moving average is around $92.21 a barrel today, according to data compiled by Bloomberg. The indicator is near the lowest price traded so far this week, signaling it’s a technical-support level where buy orders may be clustered.

“The bottom end of the range is defined by that 200-day moving average, which is currently at around $92.20,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market will struggle to get through that $98 to $100 range without a significant event that causes some sort of supply shortage to emerge in the Middle East.”

U.S. gasoline consumption fell last week to 8.34 million barrels a day, the lowest level since March 15, according to the report from the EIA, the Energy Department’s statistics unit, on May 15. Demand for distillate fuels, including heating oil and diesel, decreased to 3.58 million.

The Organization of Petroleum Exporting Countries is forecast to boost crude exports this month to meet rising demand in Asia. The group will ship 23.87 million barrels a day of crude in the four weeks ending June 1, up from 23.65 million in the previous period to May 4, Oil Movements, a tanker tracker, said in a report yesterday.

Middle East shipments will gain 1.2 percent to 17.54 million barrels a day, compared with 17.33 million during the month to May 4, according to Oil Movements. The figures exclude Angola and Ecuador and include non-OPEC nations Oman and Yemen.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Lananh Nguyen in London at lnguyen35@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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