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Crude Slips From Near Two-Month High Amid Limited Volumes

Dec. 30 (Bloomberg) -- West Texas Intermediate crude slipped from near its highest closing level in two months and Brent declined for the first time in four days, amid trading volumes that were about half their average level.

WTI declined after settling above $100 a barrel on Dec. 27 for the first time since Oct. 18, following larger-than-expected declines in U.S. crude and product inventories reported by the Energy Information Administration. Libya resumed production from the Messla field, the country’s National Oil Corp. said on its website. A possible agreement with rebels to reopen the nation’s port of Hariga collapsed, the oil ministry said Dec. 28.

“This week should also be a low-volume week,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “What can happen to benchmarks during a holiday market” can be “disorderly.”

WTI for February dropped as much as 66 cents to $99.66 a barrel in electronic trading on the New York Mercantile Exchange and traded for $99.74 as of 1:08 p.m. London time. It closed at $100.32 on Dec. 27. The volume of all contracts traded was about 43 percent below the 100-day average. Prices have climbed 8.6 percent in 2013, set for a fourth annual gain in five years.

Brent for February settlement was down 69 cents at $111.49 a barrel on the London-based ICE Futures Europe exchange. Prices have advanced 0.4 percent this year. The European benchmark crude was at a premium of $11.75 to WTI. The spread closed at $11.96 on Dec. 27, narrowing for a third day.

Oil Supplies

Libya’s Tobruk and Sarir refineries also resumed operation yesterday, state-owned NOC said on its website. citing Arabian Gulf Oil Co.’s Mohamed Bin Shatwan.

While there is currently no deal to reopen the port of Hariga, negotiations with rebels holding the terminal continue, Ibrahim Al Awami, head of measurement and inspection at Libya’s oil ministry, said by phone Dec. 28. The country is pumping 233,889 barrels of crude a day, compared with a daily capacity of about 1.6 million, the oil ministry said Dec. 21.

WTI has increased 8.2 percent in December amid reduced crude stockpiles in the U.S., the world’s biggest oil consumer. The country will account for about 21 percent of global demand this year, according to the International Energy Agency.

Inventory Drop

U.S. crude stockpiles dropped last week by 4.73 million barrels to 367.6 million barrels, the lowest level since September, amid an increase in refinery operations, the Energy Information Administration reported on Dec. 27. A median decline of 2.65 million barrels was forecast by analysts in a Bloomberg News survey. Distillate supplies, including diesel and heating fuel, fell by 1.85 million barrels to 114.1 million.

Refineries operated at an average 92.7 percent of capacity, the highest rate since July 12. Consumption of distillates climbed 2 percent to 4.17 million barrels a day.

“We saw some strength on West Texas based on the better-than-expected figures” from the EIA, Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone today. “There’s potential for the market to rally further if it gets more good news. The U.S. may see further improvement in economic statistics in the next few weeks.”

The EIA will next report weekly data on inventories and demand levels on Jan. 3, two days later than normal because of the New Year holiday.

Brent will drop for a second year in 2014 as U.S. oil production expands and supply threats ease in the Middle East and North Africa, a separate Bloomberg survey showed. Futures will decline to $105, down from $108.70 in 2013, according to the median estimate of the seven analysts who most accurately predicted this year’s level. Prices averaged $111.68 in 2012.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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