WTI Crude Drops as U.S. Supplies Near Three-Decade High

West Texas Intermediate dropped for the first time in three days after an industry report showed U.S. crude stockpiles remained near the highest level in more than 30 years.

Futures lost as much as 1.1 percent in New York, before paring some of the decline. U.S. inventories slid by 28,000 barrels last week to 392 million, the American Petroleum Institute said after futures markets settled yesterday. Crude supplies climbed to 396.3 million earlier this month, the most since July 1981. A report from the Department of Energy today may show a decrease of 1.75 million barrels, according to a Bloomberg News survey. Stockpiles last month swung between a drop of as much as 6.3 million barrels and a gain of 3 million, according to weekly government data.

“Today is fairly quiet on the economic data front so the focus will be on the DOE stats later,” Bjornar Tonhaugen, senior commodities analyst at Nordea Markets, said by telephone from Oslo. “It’ll be interesting to see whether the Cushing levels fall, as they are set to drop in the third quarter and this could create some market moves.”

WTI for August delivery was trading at $94.83 a barrel, down 49 cents, at 1:45 p.m. London time in electronic trading on the New York Mercantile Exchange, after falling as much as $1.05. The contract rose 14 cents to $95.32 yesterday, the highest close since June 20.

Brent for August settlement was down 14 cents at $101.12 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $6.29 to WTI futures after closing yesterday at $5.94, the lowest since January 2011.

Fuel Supplies

WTI is heading for a 2.2 percent decline this quarter amid speculation that the U.S. Federal Reserve will pare stimulus as signs grow of economic improvement in the U.S., the world’s biggest consumer of crude. WTI has gained 3.3 percent this year. Brent futures are headed for an 8.9 percent loss, the third quarterly drop, and have also fallen by 8.9 percent this year.

Gasoline stockpiles increased by 1.3 million barrels last week, the API data show. Supplies are projected to rise by 875,000 barrels, according to the median estimate of 12 analysts surveyed by Bloomberg before today’s report by the Energy Information Administration at 10:30 a.m. in Washington. Distillate inventories, including heating oil and diesel, climbed by 527,000 barrels, according to the API, compared with a forecast 650,000-barrel gain in the DOE survey.

Cushing Stockpiles

Crude stockpiles at Cushing, Oklahoma, the delivery point for Nymex WTI contracts and the biggest U.S. oil-storage hub, were up 706,000 barrels at 49.2 million, according to the API. That was the first gain in four weeks.

“The high volatility in the weekly numbers over the last six weeks is a bit of a concern, with major draws and then replenishment,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “Clearly we are expecting to see declines over the next weeks and months.”

The API in Washington collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Information Administration, the Energy Department’s statistical arm, for its weekly survey.

Angola, Africa’s second-largest oil producer, will keep crude exports in August unchanged at 56 cargoes, the same as for July, according to a final loading program obtained by Bloomberg News. Exports will be 53.69 million barrels, or 1.73 million barrels a day, the plan shows.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

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

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