The spread between West Texas Intermediate and Brent widened to an eight-month high after industry data showed crude stockpiles rose for a ninth week in the U.S., the world’s biggest oil consumer.
Futures fell as much as 1.2 percent in New York. U.S. crude inventories increased by 6.92 million barrels last week, the American Petroleum Institute said yesterday. An Energy Information Administration report today is projected to show supplies climbed by 750,000 barrels, according to a Bloomberg News survey. The Organization of Petroleum Exporting Countries will keep its production quota unchanged at a meeting next week in Vienna, a separate Bloomberg News survey showed. Brent rose as much as 0.6 percent in London.
The European grade “continues to draw support from geopolitical concerns, while WTI is less dependent on global geopolitical jitters,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Cushing crude stockpiles are always in focus and we have had six consecutive weeks of gains there,” he said, referring to WTI’s delivery point in Oklahoma.
Brent, the North Sea benchmark used to price more than half of the world’s crude, was at a premium of $18.63 a barrel to WTI, the biggest since March 8 on a closing basis. The spread widened for a sixth day, from $17.20 yesterday. Brent for January settlement gained 42 cents to $111.30 a barrel on the London-based ICE Futures Europe exchange as of 1:10 p.m. local time.
WTI for January delivery traded at $92.69 after earlier dropping as much as $1.16 to $92.52 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 0.4 percent to $93.68 yesterday. The volume of all futures traded was about 5 percent above the 100-day average.
“The key for the market will be those numbers” from the EIA, said David Lennox, a resource analyst at Fat Prophets in Sydney. “New supply in the U.S. is causing a build-up of inventories.”
WTI declined in the six weeks through Nov. 15, the longest losing streak in 15 years, as U.S. crude supplies expanded amid a surge in production. Stockpiles are projected to have risen to 389.2 million barrels in the seven days ended Nov. 22, according to the median estimate of 11 analysts surveyed before the EIA report.
Gasoline supplies increased by 201,000 barrels last week, the API said. The EIA data will probably show a gain of 500,000 barrels, according to the survey. Distillate inventories, including heating oil and diesel, fell by 1.71 million barrels, compared with a projected 1 million decrease in the survey.
The API in Washington collects 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.
OPEC, which pumps about 40 percent of the world’s oil, will reaffirm its output target of 30 million barrels a day at the Dec. 4 meeting, according to 18 of 20 analysts and traders surveyed by Bloomberg. Two respondents said supply will be cut.
The 12-member group produced 30.62 million barrels a day last month, data compiled by Bloomberg show. That’s up from 30.58 million in September.
European Union governments reinstated sanctions against 16 of 18 Iranian companies that were voided by an appeals court on Sept. 16, according to the bloc’s official journal. Companies affected include the Islamic Republic of Iran Shipping Lines, Bimeh Iran, HDS Lines and Khazar Shipping Lines. The EU offered “new statements of reasons” to justify the restrictions.
Iran, an OPEC member, reached an accord with world powers to limit its nuclear program in exchange for as much as $7 billion in relief from some sanctions, sending crude prices lower this week.
Brent is unlikely to slide below a range of $95 to $100 a barrel for a full year amid supply risks and actions by OPEC, Adam Longson, a commodity analyst at Morgan Stanley in New York, said in a note yesterday.
WTI is extending losses as technical indicators signal a possible “death cross.” The 50-day moving average, at $98.55 a barrel today, is less than 10 cents above the 200-day mean, the smallest premium since the end of January, according to data compiled by Bloomberg. Investors typically sell contracts when a moving average falls below a longer-term one.