West Texas Intermediate fell, heading for a monthly decline before a report that may show U.S. crude inventories at a two-decade peak.
Futures fell as much as 0.9 percent in New York after advancing 1.6 percent yesterday. Crude stockpiles increased by 1.1 million barrels last week to 389.7 million, the most since July 1990, according to a Bloomberg survey before a report from the Energy Information Administration tomorrow. WTI’s discount to Brent narrowed to a 15-month low.
“Abundant supplies” have pressured prices, said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, who forecasts WTI will average $95 a barrel this quarter. “The first half of April was very weak, as poor economic data fueled demand concerns and financial investors took to the exit.”
WTI for June delivery fell as much as 87 cents to $93.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.81 as of 1:17 p.m. London time. The volume of all contracts traded was 32 percent below the 100-day average. Futures climbed 1.5 percent to $94.50 yesterday, the highest since April 10. Prices are down 3.5 percent this month.
Brent for June settlement was 51 cents lower at $103.30 a barrel on the London-based ICE Futures Europe exchange. The front-month contract for the European benchmark grade was at a premium of as little as $9.05 to WTI, the smallest gap since Jan. 19, 2012.
U.S. gasoline stockpiles probably dropped 700,000 barrels last week, while distillate inventories, a category that includes heating oil and diesel, increased 250,000 barrels, according to the median estimate of eight analysts in the Bloomberg News survey.
The American Petroleum Institute is scheduled to release separate supply data today. The industry-funded API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey.
U.S. crude exports climbed in February to the highest since April 2000, with all sales going to Canada, the EIA said on its website.
The U.S. shipped 124,000 barrels a day of crude in February, up 70 percent from the previous month, according to the EIA. U.S. law restricts exports without permission from the president, with a few exceptions that include sales to Canada. Refiners in eastern Canada have replaced some overseas crude as horizontal drilling and hydraulic fracturing boosted production and depressed prices in the U.S.
Saudi Arabia plans to boost oil production capacity to 15 million barrels a day by 2020, Prince Turki Al-Faisal said in a speech at Harvard University today. The country pumped 9.3 million barrels last month and is able to reach 12 million within 30 days, according to the International Energy Agency.
Saudi Arabian Oil Minister Ali al-Naimi is scheduled to speak at the Center for Strategic & International Studies later today in Washington D.C. The kingdom is the largest member of the Organization of Petroleum Exporting Countries, which is due to meet on May 31 in Vienna to review its output target.
WTI has technical support along its middle Bollinger Band, around $92.75 a barrel today, according to data compiled by Bloomberg. Futures yesterday traded below this indicator before settling above it for a third day. Buy orders tend to be clustered near chart-support levels.
“It’s difficult to see where demand might come from in the U.S.,” said David Lennox, an analyst at Fat Prophets in Sydney. “Until we see a solid outlook for the economy, we can’t see any change. Supply should adequately cover any increase in demand.”