West Texas Intermediate halted a three-day advance as the International Energy Agency lowered its forecast for oil demand and U.S. crude inventories climbed to a 22-year high.
Futures were little changed in New York, paring an earlier loss of as much as 0.5 percent. The IEA downgraded its estimate for global consumption for a third month and predicted the weakest demand in Europe since the 1980s. Citigroup Inc. said today that downward pressures on crude prices have grown. U.S. stockpiles increased last week to the highest level since July 1990, a government report showed yesterday.
“Demand remains subdued and supplies are adequate,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicted that WTI will struggle to climb above $98 a barrel this month.
WTI for May delivery dropped as much as 51 cents to $94.13 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.45 at 1:22 p.m. London time. The volume of all futures traded was 40 percent lower than the 100-day average. The contract rose 44 cents to $94.64 yesterday, its highest close since April 2.
Brent for May settlement was little changed at $105.78 a barrel on the London-based ICE Futures Europe exchange, giving the European benchmark grade a premium of $11.33 to WTI futures. The spread was $11.15 yesterday, its narrowest closing level since June 21.
Global demand for oil will increase by 795,000 barrels a day, or 0.9 percent, to average 90.58 million a day this year, according to the IEA’s April report. That’s 45,000 barrels a day fewer than it forecast last month. European consumption will slump by 340,000 barrels a day, the Paris-based energy adviser to developed nations said.
Still, an imminent recovery in refinery operations after maintenance and political threats to supply mean “it may be too early to call a bear market,” the IEA said.
Citigroup Inc. is “moderately bearish” on oil prices this year because the IEA and other organizations have lowered their forecasts, Seth Kleinman, the bank’s head of energy strategy, said at the Bloomberg Oil Forum in London today.
A U.S. Energy Department report yesterday showed that crude stockpiles rose by 250,000 barrels last week to 389 million, the most since July 1990. The increase was still less than the 1.5 million barrels that analysts in a Bloomberg survey had predicted. Domestic production rose by 30,000 barrels to 7.18 million barrels a day, the fastest rate since July 1992, according to the Energy Information Administration, the Energy Department’s statistical unit.
Oil in New York has technical support along its middle Bollinger Band, about $93.42 a barrel today, according to data compiled by Bloomberg. Futures halted an intraday drop near this level yesterday, before settling above it for a third day. Buy orders tend to be clustered close to chart-support levels.