WTI Heads for Weekly Drop as Refiners Slow Rates; Brent Steady

West Texas Intermediate headed for a weekly decline as U.S. refineries reduced operating rates at the end of the peak season for gasoline demand in the world’s biggest oil consumer. Brent was steady in London.

Futures were little changed in New York and poised for a 1.6 percent weekly drop. Refineries operated at 93.3 percent of their capacity last week, down 0.2 percentage points, according to the Energy Information Administration. Processing plants schedule maintenance during September and October as a transition to making winter-grade fuels. Libyan crude output was steady at 725,000 barrels a day, National Oil Corp. said.

“Lower demand is certainly the base case scenario, but it’s unlikely the sellers will get too aggressive,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Firstly, we start to move into the hurricane season in the U.S., and secondly, peak demand for oil occurs over the northern hemisphere winter. We could see softness, but I’d be surprised if we see any aggressive sell down.”

WTI for October delivery was at $94.44 a barrel in electronic trading on the New York Mercantile Exchange, down 1 cent, at 1:36 p.m. Sydney time. The contract slid 1.1 percent to $94.45 yesterday. The volume of all futures traded was about 35 percent below the 100-day average.

Brent for October settlement was down 7 cents at $101.76 a barrel on the London-based ICE Futures Europe exchange. Prices are 1.4 percent lower for the week. The European benchmark crude was unchanged at a premium of $7.38 to WTI.

Fuel Supplies

U.S. gasoline stockpiles shrank by 2.32 million barrels to 209.99 million during the week ended Aug. 29, the EIA said yesterday. Supplies were projected to decline by 1.4 million, according to the median estimate of 11 analysts in a Bloomberg News survey. The country’s peak summer driving season, which started on Memorial Day in May, typically ends on Labor Day.

Distillate inventories, a category which includes heating oil and diesel, expanded by 605,000 barrels to 123.4 million, said the EIA, the Energy Department’s statistical arm. They were forecast to fall by 1 million in the survey.

Crude supplies shrank by 905,000 barrels to 359.6 million. They were projected to decline by 1 million barrels. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and biggest U.S. oil-storage hub, fell by 385,000 barrels to 20.3 million.

Hurricane Norbert

WTI may decrease next week on ample U.S. supply, according to a Bloomberg News survey. Thirteen of 30 analysts, or 43 percent, predict prices will decline through Sept. 12, while 30 percent of respondents forecast an increase.

Hurricane Norbert is moving toward Mexico’s Baja California Sur after strengthening in the Pacific Ocean, according to the U.S. National Hurricane Center. The Category 1 storm had top winds of 80 miles an hour (130 kilometers an hour) as it moved northwest at 6 miles an hour, the center said on its website at 2 a.m. Pacific time.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Mike Anderson

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