West Texas Intermediate crude fell for a fifth day in its longest run of declines since December. Antitrust regulators are questioning European oil companies about possible manipulation of prices.
Futures dropped below $93 a barrel in New York for the first time since May 2. Crude inventories gained 1.1 million barrels last week, the industry-funded American Petroleum Institute said yesterday. A government report today may show stockpiles climbed 450,000 barrels, according to a Bloomberg survey. Royal Dutch Shell Plc, BP Plc, Statoil ASA and Platts said they’re being investigated after the European Commission conducted raids on their offices in three countries.
“The world will remain well-supplied,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Higher prices lately have triggered a boost to capacity that will continue to outpace slack post-crisis demand growth.”
WTI for June delivery fell as much as $1.29, or 1.4 percent, to $92.92 a barrel and was at $93.49 in electronic trading on the New York Mercantile Exchange at 1:38 p.m. London time. The volume of all contracts traded was 44 percent above the 100-day average. Prices decreased 96 cents to $94.21 yesterday, the biggest decline since May 1 and the lowest close since May 2.
Brent for June settlement fell 37 cents to $102.23 a barrel on the London-based ICE Futures Europe exchange. The volume of contracts traded was 26 percent higher than the 100-day average. The front-month European benchmark was at a premium of $8.77 to WTI, from $8.39 yesterday. It closed at $7.65 on May 13, the narrowest gap since January 2011.
Oil fell as the euro-area economy contracted more in the first quarter than economists forecast, extending a recession and adding pressure on the currency bloc’s leaders to relax their budget rigor and do more to spur growth.
Gross domestic product for the 17 nations using the euro shrank by a combined 0.2 percent after declining 0.6 percent in the previous three months, the European Union’s statistics office in Luxembourg said today. The median of 39 estimates in a Bloomberg News survey predicted 0.1 percent shrinkage. The economy contracted 1 percent from a year earlier.
The European Commission has concerns that companies “may have colluded in reporting distorted prices to a price-reporting agency to manipulate the published prices for a number of oil and biofuel products,” it said in a statement yesterday.
Shell is “fully cooperating” with the investigation into trading activities, the company said in a statement. Statoil said the suspected violations relate to prices on Platts, which publishes benchmarks used in the oil industry and is owned by McGraw Hill Financial Inc.
Price assessments could be vulnerable to manipulation because traders participate voluntarily, meaning they may selectively submit only trades that benefit their positions, the International Organization of Security Commissions said in an October report.
U.S. gasoline stockpiles fell 480,000 barrels last week, the API said. An Energy Information Administration report today may show they declined 1.1 million barrels, according to the median estimate of 12 analysts in the Bloomberg survey. Distillate inventories, a category that includes heating oil and diesel, rose 1.9 million barrels, compared with a projected gain of 475,000 barrels in the survey.
The 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 U.S. Energy Department’s statistical arm, for its weekly survey.
“Inventories are high,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “Given that there are no geopolitical issues at the moment, oil should drop,” he said, predicting that West Texas has buying support at $92.50 a barrel.