West Texas Intermediate crude tumbled to a one-month low on speculation that a government report will show that U.S. stockpiles rose last week. Brent advanced in London.
Futures dropped 1.1 percent in New York. Supplies probably gained 2 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report tomorrow. U.S. output climbed to the highest level since 1988 in January. Brent increased as the European Union told Russia to shift course in Crimea by next week or risk more sanctions.
“There are a lot of barrels flooding the market,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “This trend should continue. WTI is in a corrective phase. I’m looking for WTI to move to the $98-to-$96 area in the near term.”
WTI for April delivery fell $1.09 to close at $100.03 a barrel on the New York Mercantile Exchange. It was the lowest settlement since Feb. 11. The contract touched $99.52. Futures are up 1.6 percent this year. The volume of all futures traded was 41 percent above the 100-day average at 4:37 p.m.
Prices were little changed after the American Petroleum Institute reported U.S. crude inventories rose 2.63 million barrels last week. WTI futures fell $1.53, or 1.5 percent, to $99.59 at 4:36 p.m. in electronic trading. Prices were $99.58 before the report was released at 4:30 p.m.
Brent for April settlement rose 47 cents, or 0.4 percent, to end the session at $108.55 a barrel on the London-based ICE Futures Europe exchange. Volume was 5.4 percent higher than the 100-day average. The European benchmark closed at an $8.52 premium to WTI, up from $6.96 yesterday.
U.S. crude inventories have expanded 3.9 percent in the past seven weekly reports from the EIA to 363.8 million barrels, the highest level in two months.
Stockpiles at Cushing, Oklahoma, the delivery point for the WTI contract, fell 2.66 million barrels in the seven days ended Feb. 28 to a two-year low of 32.1 million, EIA data show. The opening in January of the southern link of TransCanada Corp.’s (TRP) Keystone XL pipeline to the Texas Gulf Coast from Cushing eased a bottleneck at the hub.
“We’re seeing a more balanced reaction to the inventory data,” said Tim Evans, an energy analyst at Citi Futures in New York. “The markets had been reacting to the downtrend in stocks at Cushing, while there was an uptrend in total U.S. stocks. The nationwide number certainly counterbalances Cushing and the market is taking notice.”
U.S. crude production advanced to 8.08 million barrels a day in the week ended Feb. 28, according to the EIA, the Energy Department’s statistical arm. Output has climbed during the past five years.
Supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week, according to the median of 10 analyst responses in the Bloomberg survey.
Refinery utilization rates were unchanged at 87.4 percent last week, the survey showed. The operating rate slid 0.6 percentage point the prior week. Refiners are doing work as they transition to summer from winter fuels.
“We’re approaching the second-quarter doldrums,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Crude inventories should continue to rise as refineries perform maintenance, which depresses demand.”
The industry-funded API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.
Brent crude has increased on concern that escalating tension between Ukraine and Russia, the world’s biggest energy exporter, would disrupt shipments. Brent, which is used to price more than half of the world’s crude and, unlike WTI, can be exported, is often more sensitive to changes in the global supply-and-demand balance.
Libya pumped 392,000 barrels of oil today, said Mohamed Elharari, a spokesman for state-run National Oil Corp. in Tripoli. The country, which holds Africa’s largest oil reserves, produced about 1.6 million barrels a day before the rebellion that ended Muammar al-Qaddafi’s four-decade rule in 2011. Rebels in eastern Libya announced the start of their own crude exports independent of the central government, Al Nabaa TV said today.
“Brent is higher because of geopolitical tension in the Ukraine,” Evans said. “The news from Libya is mixed. Oil production is showing incremental improvement but the situation in the eastern part of the country doesn’t look good.”
Investors removed a net $61.6 million yesterday from U.S.- listed exchange-traded funds that invest in energy, equivalent to 1.7 percent of total assets, data compiled by Bloomberg show. They cut $25.4 million to the United States Oil Fund, the biggest oil ETF.
Implied volatility for at-the-money WTI options expiring in May was 19 percent, up from 18.8 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 640,738 contracts at 4:38 p.m. It totaled 528,265 contracts yesterday, 5.3 percent above the three-month average. Open interest was 1.69 million contracts.
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