Oil fell to near a six-week low in New York before a report forecast to show that U.S. stockpiles increased last week. U.S. crude’s discount to North Sea Brent oil surpassed $20 for the first time since October.
West Texas Intermediate futures extended yesterday’s decline, bringing this week’s loss to 1.8 percent. Greek Prime Minister Lucas Papademos will meet the country’s political leaders today to discuss measures for securing a second European Union-led bailout. U.S. crude inventories probably rose to the highest in more than four months and gasoline supplies climbed for a second week, according to a Bloomberg survey before an Energy Department report tomorrow.
“The market is oversupplied, which is putting pressure on WTI,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, who forecasts oil will slide this year. “But fears of supply disruption are keeping Brent supported. The widening of the spread is the constant factor in the market.”
Oil for March delivery dropped as much as $1.07, or 1.1 percent, to $95.84 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.03 at 1:07 p.m. London time. It fell to $95.44 a barrel on Feb. 2, the weakest level since Dec. 20. Prices have declined 2.8 percent this year.
Brent oil for March settlement on the London-based ICE Futures Europe exchange was at $115.90 a barrel, down 3 cents. The European benchmark extended its premium over WTI to as much as $20.21 a barrel, the widest gap since Oct. 24. The spread reached a record-high $27.88 on Oct. 14.
European leaders have increased pressure on Greece to meet the conditions of the 130 billion-euro ($171 billion) rescue, with German Chancellor Angela Merkel saying “time is running out.” While Papademos and the party chiefs already agreed to make further cuts this year, they have yet to close gaps over measures demanded by creditors.
U.S. crude inventories probably rose 2.5 million barrels in the week ended Feb. 3, according to the median estimate of seven analysts surveyed by Bloomberg News before tomorrow’s Energy Department report. Gasoline stockpiles climbed by 500,000 barrels for a second weekly gain and supplies of distillate fuels, including diesel and heating oil, declined 1 million barrels, the survey shows.
Crude stockpiles “are not considered low and we therefore see some downward pressure on WTI,” said Victor Shum, senior principal at Purvin & Gertz Inc., a consultant in Singapore. “That’s why prices are below $100.”
The industry-funded American Petroleum Institute will report its own stockpile data today in Washington.
Oil in New York was higher earlier today after settling above technical support along the lower Bollinger Band yesterday, according to data compiled by Bloomberg. This indicator is near $96.28 a barrel today. Buy orders tend to be clustered close to chart-support levels.