WTI Heads for Weekly Drop as OPEC Keeps Output Target Unchanged

West Texas Intermediate crude headed for a third weekly decline as OPEC kept its production target unchanged for a third consecutive time and after U.S. stockpiles climbed to the most in more than 80 years.

Futures retreated as much as 1 percent in New York. The Organization of Petroleum Exporting Countries maintained its target of 30 million barrels a day, Libya’s OPEC Governor Samir Salem Kamal said today after ministers ended a meeting in Vienna. Saudi Oil Minister Ali al-Naimi said earlier that prices are reasonable and the market situation is excellent. U.S. crude inventories rose 3 million barrels last week to 397.6 million, the highest level since at least 1931, government data showed.

“It is what the market was expecting,” Seth Kleinman, head of energy strategy at Citigroup Inc. in London, said of OPEC’s decision at its headquarters in the Austrian capital. “The market is oversupplied, and OPEC needs to act but is not feeling much urgency clearly.”

WTI for July delivery was at $92.78 a barrel, down 83 cents, or 0.9 percent, in electronic trading on the New York Mercantile Exchange at 1:28 p.m. London time. The volume of all futures traded was 33 percent below the 100-day average. The contract increased 48 cents to $93.61 yesterday. Prices have fallen 1.4 percent this week and are little changed this month after a 3.9 percent loss in April.

OPEC Supply

Brent for July settlement traded 77 cents lower at $101.42 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $8.60 to WTI futures, from $8.58 yesterday. The spread is poised to narrow for a third month.

OPEC has no formal target for prices, the group’s Secretary-General Abdalla El-Badri told a news conference in Vienna after the ministers’ meeting.

Global supply and demand are balanced, inventories are moderate and the market situation is excellent, al-Naimi, oil minister for the world’s biggest crude exporter, told reporters earlier.

“I said in March $100 is a reasonable price. Where are the prices today? They are still at the reasonable level,” al-Naimi said. “We’re not talking about a floor or a ceiling for the price. The prices are determined by the market.”

Six-Month High

Production from the 12-member group climbed to the highest level in six months in May, a Bloomberg survey showed. Daily output rose by 98,000 barrels, or 0.3 percent, to an average of 31.034 million from a revised 30.936 million in April, according to the survey of oil companies, producers and analysts.

Brent has declined about 7 percent while WTI has risen 7 percent since OPEC’s last meeting on Dec. 12.

An oversupply of crude in Houston should keep WTI prices at least $8 a barrel below Brent, according to Adam Longson, an analyst at Morgan Stanley in New York. Inventories along the U.S. Gulf Coast surged to a four-year high of 195.5 million barrels on April 26, data from the Energy Information Administration show. They were at 193.2 million last week.

Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, increased by 335,000 barrels to 50.5 million last week, according to yesterday’s report by the EIA, the Energy Department’s statistical arm. Supplies are down from a record 51.9 million on Jan. 18.

Gasoline Stockpiles

U.S. gasoline inventories dropped 1.5 million barrels last week, the data show. They were forecast to fall by 500,000 barrels, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate supplies, including heating oil and diesel, rose 1.9 million barrels, compared with a projected decrease of 450,000.

WTI will decline in the week through June 7 because of ample supplies, said 23 of 42, or 55 percent, of analysts and traders in a separate Bloomberg survey. Ten respondents, or 24 percent, predicted a gain and nine projected no change. Last week, 63 percent of analysts forecast a fall.

To contact the reporters on this story: Sherry Su in London at lsu23@bloomberg.net; Wael Mahdi in Manama at wmahdi@bloomberg.net

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

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