West Texas Intermediate fell to the lowest in more than three months as crude stockpiles rose in the U.S., the world’s biggest oil consumer. The grade’s discount to North Sea Brent was its biggest in six months.
Futures dropped as much as 2 percent in New York. Crude inventories increased by 3 million barrels last week, the American Petroleum Institute said yesterday. A government report today is projected to show supplies climbed by the same amount, advancing for a fifth week, according to a Bloomberg News survey. Oil stockpiles in China, the second-largest consumer, gained last month to the highest level in official data today going back to January 2010.
“The weakness of WTI versus Brent is partly down to an abundance of crude in the U.S. at a time when refinery runs are low,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.
WTI for December delivery slid as much as $1.98 to $96.32 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since July 1. It was at $96.73 as of 1:43 p.m. London time. The November contract expired yesterday down $1.42 at $97.80. The volume of all futures traded was about 52 percent more than the 100-day average.
Brent for December settlement was down 16 cents at $109.81 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of as much as $13.37 to WTI, the widest since April 2.
U.S. gasoline stockpiles shrank by 510,000 barrels in the week ended Oct. 18, the industry-funded API said. A report today from the Energy Information Administration may show inventories decreased by 1 million, according to the median estimate of 10 analysts surveyed by Bloomberg. The EIA is the Energy Department’s statistical arm.
Distillate supplies, including heating oil and diesel, rose by 815,000 barrels, the API data show. A median 1.8 million drop is forecast in the Energy Department 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, which is scheduled to release its data at 10:30 a.m. in Washington.
“The move in WTI is a reaction to supply levels in the U.S.,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who predicts investors may buy WTI at about $95 a barrel. “Fundamentals are driving the current momentum.”
In China, crude stockpiles increased by 1.43 percent in September from August, according to China Oil, Gas & Petrochemicals, a newsletter published by the official Xinhua News Agency. The data excludes emergency reserves. Supplies climbed to 32.41 million metric tons, or about 237.6 million barrels, Bloomberg calculations show.
The Asian nation accounted for about 11 percent of global oil consumption this year, compared with 21 percent for the U.S., according to the International Energy Agency.