West Texas Intermediate slipped for a second day on speculation that crude inventories will accumulate once demand for winter heating fuel tails off.
Futures declined as much as 0.6 percent in New York. Twenty-one of 34 analysts and traders, or 62 percent, in a Bloomberg News survey estimated WTI will decline through Feb. 21 as U.S. crude stockpiles expand and freezing temperatures recover. Crude supplies rose by 3.27 million barrels last week, according to the Energy Information Administration.
“Crude is overbought,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Refinery rates will be shrinking as we finally enter the seasonal maintenance period and the weather in the U.S. Northeast improves.”
WTI for March delivery dropped as much as 57 cents to $99.78 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.15 as of 1:30 p.m. London time. The volume of all futures traded was about 5 percent below the 100-day average. Prices are little changed this week, after a four-week advance that was the longest since July.
Brent for April settlement slid 9 cents to $108.43 a barrel on the ICE Futures Europe exchange. The March contract expired yesterday after losing 6 cents to $108.73. The European benchmark crude was at premium of $8.58 to WTI for the same month on the ICE exchange, compared with $8.41 yesterday.
WTI advanced 2.5 percent last week, the most since December, as cold weather boosted demand for distillate fuels. Stockpiles including heating oil and diesel shrank by 731,000 barrels to 113.1 million in the seven days ended Feb. 7, according to the Energy Information Administration, the Energy Department’s statistical arm.
Distillate inventories have fallen to the lowest seasonal level since 2003, EIA data show. January was the coldest start to the year in more than a decade and additional snow is forecast to sweep across the U.S. Northeast.
New York and Boston may pick up a few more inches of snow, and accumulations in parts of Pennsylvania and central New England will reach close to 20 inches (51 centimeters), said Alex Sosnowski, a meteorologist at AccuWeather Inc. in State College, Pennsylvania.
“Certainly the cold-weather demand is one of the underpinning factors,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney who predicts investors may sell WTI contracts at about $100.50 a barrel.
In Libya, output from the Sharara field slid to 200,000 barrels a day from 350,000 barrels after protesters shut a pipeline to the Zawiya terminal, Ibrahim Al Awami, an Oil Ministry official, said by phone from Ras Lanuf yesterday. The nation is the holder of Africa’s biggest oil reserves and Sharara is its second-largest oil field.