West Texas Intermediate oil was little changed near a four-month high as investors discounted a drop in U.S. retail sales and stockpiles tumbled at Cushing, Oklahoma, the delivery point for New York futures.
Prices dropped 2 cents, the smallest move since Nov. 20. The Commerce Department said retail sales declined by the most in 10 months in January, which was the coldest start of the year since 2001. WTI rose to the highest level since October yesterday after Energy Information Administration data showed Cushing supplies slipped 6.6 percent to 37.6 million barrels last week.
“We’re back up above $100 and the bulls still have the momentum,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The disappointing retail sales numbers have been shrugged off because of last month’s weather.”
WTI for March delivery settled at $100.35 a barrel on the New York Mercantile Exchange. Yesterday’s settlement of $100.37 was the highest since Oct. 18. Trading was 0.6 percent above than the 100-day average at 2:43 p.m.
Brent for March settlement, which expired today, slipped 6 cents to end the session at $108.73 a barrel on London-based ICE Futures Europe. The more active April contract increased 17 cents to close at $108.52. Trading was 2.6 percent below the 100-day average.
The European grade, used as a benchmark for more than half of the world’s crude, closed at an $8.38 premium to WTI, down from $8.42 yesterday and the smallest spread since Oct. 9. The spread has declined as the southern portion of TransCanada Corp. (TRP)’s Keystone XL pipeline began moving crude oil to the Gulf Coast of Texas from Cushing last month.
“WTI continues to get strength from the opening of the southern portion of the pipeline and the fall in supplies at Cushing,” McGillian said.
Retail sales were projected to be unchanged, according to the median 86 forecasts by economists in a Bloomberg survey. Oil also slipped in early trading after the Labor Department reported that U.S. jobless claims increased by 8,000 to 339,000 in the week ended Feb. 8. The median forecast of 52 economists surveyed by Bloomberg called for a decrease to 330,000.
Oil inventories in advanced economies tumbled in the fourth quarter by the most since 1999, the International Energy Agency said today. The Paris-based adviser to developed countries also boosted forecasts for global fuel demand this year and the amount of crude that will be required from the Organization of Petroleum Exporting Countries.
“The IEA data today should lend some support,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “Demand is buoyant, which should keep prices from falling too far.”
Crude supply losses in OPEC members Libya, where production collapsed by 1 million barrels a day in the second half of the year, and Iraq have contributed to the tightening in oil inventories, the IEA said today.
“OPEC will struggle to meet the increase in demand,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $110 billion of assets. “Libyan production has yet to recover, Iran has sanctions and growing unrest is making Iraqi output sporadic.”
OPEC will increase shipments this month to the highest level in more than a year as Asian refiners accumulate supplies, according to Oil Movements. The 12-member group will bolster sailings by 890,000 barrels a day, or 3.8 percent, to 24.35 million barrels a day in the four weeks to March 1, the most since December 2012, the researcher said today in a report. The figures exclude Angola and Ecuador.
U.S. crude inventories climbed by 3.27 million barrels to 361.4 million last week, the EIA said yesterday. Supplies of distillate fuel, a category that includes heating oil and diesel, decreased by 731,000 barrels to 113.1 million.
Total fuel consumption fell 569,000 barrels a day to 18.5 million in the week ended Feb. 7, yesterday’s EIA report showed.
WTI’s 14-day relative strength index rose to 65.7 yesterday, according to data compiled by Bloomberg. That’s the most since Dec. 27, when crude settled at a 10-week high before falling. An RSI above 70 typically signals a market is overbought. Today’s reading is below 61.
Implied volatility for at-the-money WTI options expiring in April was 17.2 percent, down from 17.6 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 453,783 contracts at 2:47 p.m. Yesterday’s volume of 769,751 contracts was the most since Dec. 4 and 50 percent above the three-month average. Open interest was 1.65 million contracts, the most since Dec. 13.
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