WTI-Brent Discount Nears Widest Level Since March

West Texas Intermediate oil traded near its widest discount to North Sea Brent crude in eight months as investors weighed a possible easing of U.S. financial stimulus.

WTI lost as much as 0.3 percent in New York before a planned speech by Federal Reserve Chairman Ben S. Bernanke in Washington, as investors speculate about whether he’ll maintain bond purchases that have been pumping liquidity into the economy. U.S. crude traded at a five-month low yesterday after Federal Reserve Bank of New York President William C. Dudley raised the prospect the central bank will trim stimulus. Crude stockpiles probably fell in the U.S. after eight weeks of gains, a Bloomberg survey showed before a government report tomorrow.

“WTI’s weakness represents the fact that the market is comfortable with the demand and supply situation,” Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, said by telephone today. “There’s the expectation of higher supply and no big increase in demand. There is still uncertainty over economic development in the next six months and that’s a factor that’s keeping prices down.”

WTI for December delivery slid as much as 28 cents to $92.75 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.85 at 11:57 a.m. London time. It fell 81 cents yesterday to $93.03 a barrel, the lowest level since May 31. The more active January contract lost 16 cents to $93.52. The volume of all futures traded was about 32 percent below the 100-day average.

Brent for January settlement fell as much as 56 cents, or 0.5 percent, to $107.91 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $14.85 to WTI for the same month. The spread closed at $14.79 yesterday. On Nov. 14, it was the widest in intraday trading since March 18.

Economic Stimulus

The Federal Open Market Committee, which has been buying $85 billion of bonds every month to spur growth, has indicated plans to slow the purchases. Dudley said while he’s “more hopeful” the U.S. economy is strengthening, the signals aren’t yet sufficient to warrant stimulus cuts. His comments echoed those made last week by Fed Vice Chairman Janet Yellen, the nominee to succeed Bernanke, whose term ends on Jan. 31.

The FOMC won’t taper its purchases until its March 18 to March 19 meeting, according to the median estimate of 32 economists surveyed by Bloomberg on Nov. 8. The U.S., the world’s largest oil consumer, will account for about 21 percent of global demand this year, according to the International Energy Agency in Paris.

Crude Supplies

U.S. crude stockpiles probably shrank by 1 million barrels in the week ended Nov. 15, according to the median estimate of seven analysts surveyed by Bloomberg before tomorrow’s report from the Energy Information Administration. Supplies have risen for eight weeks to 388.1 million, the highest level since June.

Gasoline inventories are expected to have climbed by 900,000 barrels last week, the survey shows. Distillate supplies, including heating oil and diesel, were probably unchanged after three weeks of declines.

The American Petroleum Institute in Washington will release separate stockpile data today. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical unit.

To contact the reporters on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

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

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