West Texas Intermediate crude fluctuated after rising the most in five weeks as the U.S. consumed gasoline at the fastest rate since July.
Futures were little changed in New York after climbing 1.5 percent yesterday. Demand for motor fuel expanded 2.6 percent last week, draining 3.76 million barrels from gasoline inventories, according to the U.S. Energy Information Administration. The stockpile decline was more than nine times the median estimate of analysts surveyed by Bloomberg News.
“We have seen from the last couple of reports that the gasoline drawdown is still quite robust,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “There appears to be enough demand being generated in the U.S. to at least take care of some domestic supply coming into the market. If that’s the case, the price will remain relatively robust.”
WTI for December delivery was at $94.85 a barrel in electronic trading on the New York Mercantile Exchange, up 5 cents at 3:55 p.m. Singapore time. The contract advanced $1.43 to $94.80 yesterday, the biggest increase since Oct. 2. The volume of all futures traded was about 33 percent less than the 100-day average. Prices have gained 3.3 percent this year.
Brent for December settlement slid 26 cents to $104.98 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $10.11 to WTI. The spread was $10.44 yesterday, the narrowest since Oct. 25.
U.S. gasoline stockpiles shrank for a fourth week to 210 million barrels in the seven days ended Nov. 1, the EIA, the Energy Department’s statistical unit, said in a report yesterday. That’s the lowest level since November last year. Demand rose to 9.29 million barrels a day, the most since July.
The U.S., the world’s largest oil consumer, will account for about 21 percent of global oil demand this year, compared with 11 percent for China, forecasts from the International Energy Agency show.
Distillate inventories, including diesel and heating oil, fell by 4.9 million barrels to 117.8 million, according to the EIA. A median drop of 1.5 million was estimated by analysts in the Bloomberg survey.
Crude inventories expanded for a seventh week, the longest stretch of gains since March, the report shows. Supplies climbed by 1.58 million barrels to 385.4 million, the highest since June 21. A gain of 2.1 million was projected.
WTI advanced yesterday after a technical indicator signaled losses in the past week were excessive. The 14-day relative strength index was below 30 for three days through Nov. 5, signaling crude was oversold, according to data compiled by Bloomberg. Today’s reading is at about 34.
Oil price declines the past week reflects “growing pains” as the market adjusts globally to an increase in U.S. shale production, according to Goldman Sachs Group Inc.
“This sharp decline in global oil prices is not the start of a significant shift in the global oil balance,” Jeffrey Currie, the bank’s head of commodities research in New York, said in an e-mailed report. “This adjustment process is likely masking a very gentle tightening in the global balance that we still believe will become apparent as refineries come out of maintenance, particularly should the return of Libyan oil production continue to prove elusive.”
Elsewhere, the alleged fixing of oil prices is unlikely to sway traders from using Brent crude as a benchmark for transactions in the $5.7 trillion commodity market, according to analysts and brokers from London to Tokyo.
Four longtime traders claimed in a lawsuit that some of the world’s biggest oil companies conspired with energy traders to manipulate the closely watched spot prices for Brent for more than a decade. The case is one of at least seven U.S. lawsuits alleging price fixing in the London-based Brent market, and comes as global regulators scrutinize financial measures after fining banks about $2.5 billion for distorting other benchmarks.