West Texas Intermediate crude declined from the highest closing price in seven weeks on speculation that supplies will remain sufficient in the U.S. even if stockpiles decreased as forecast last week.
Futures fell as much as 0.7 percent in New York after advancing for a fourth day yesterday. U.S. crude supplies fell by 800,000 barrels last week, according to a Bloomberg News survey before a report tomorrow from the Energy Information Administration. That would still leave inventories 3 percent higher than a year ago. The industry-funded American Petroleum Institute is scheduled to release its stockpile data today.
“There’s nothing here to fundamentally justify a sustained price push” to higher levels now, said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Expectations of future supplies are rather comfortable.”
WTI for June delivery was at $96.39 a barrel, down 32 cents, in electronic trading on the New York Mercantile Exchange at 1:40 p.m. London time. The contract expires today. The volume of all contracts traded was 12 percent below the 100-day average. The more active July future fell 28 cents to $96.65. Front-month prices increased 69 cents yesterday, or 0.7 percent, to $96.71, the highest close since April 2.
Brent for July settlement slid 55 cents to $104.25 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.56 to WTI for the same month, down from $7.87 yesterday.
WTI may extend gains after futures settled yesterday above a downward-sloping trend line going back to September, signaling a possible breach of technical resistance, according to data compiled by Bloomberg. This line, at about $96.45 a barrel today, connects to the high of January and is near where prices halted rallies every month since then. Investors typically buy contracts when chart resistance fails.
U.S. gasoline supplies decreased by 550,000 barrels last week, according to the median estimate of 10 analysts surveyed by Bloomberg. Distillate-fuel inventories, including heating oil and diesel, probably gained 1 million barrels, the survey shows. The U.S. Memorial Day holiday on May 27 marks the start of the nation’s peak driving period.
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 Energy Department’s statistical arm, for its weekly survey.
U.S. refineries probably operated at 88.4 percent of capacity in the seven days ended May 17, up 0.4 percentage points from the prior week and the highest rate in four months, the survey showed. Units often restart in the spring, after maintenance in late winter, as refiners prepare to meet the summer surge in demand for driving fuels.
Crude rose yesterday as Syrian government forces started an offensive against rebels, renewing concern that conflict may destabilize the Middle East. Troops loyal to President Bashar al-Assad have retaken parts of the strategic city of Al-Qusair, destroying tunnels used by rebels and seizing weapons, the state-run SANA news agency said yesterday.
The Middle East accounted for 33 percent of global oil output in 2011, according to BP Plc’s Statistical Review of World Energy.