West Texas Intermediate crude slipped from a four-month high after the Energy Information Administration said U.S. inventories climbed. Brent declined.
WTI dropped 0.4 percent. Crude supplies increased for a fifth time in the week ended Feb. 14, and demand for gasoline and diesel decreased, the EIA said. Supplies at Cushing, Oklahoma, shrank while stockpiles along the Gulf Coast gained as the southern leg of TransCanada Corp.’s Keystone XL pipeline moved oil to Texas.
“We had another build in crude inventories,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “There isn’t much demand growth, which should be alarming. We are seeing a transfer of Cushing crude to the Gulf Coast.”
WTI for March delivery, which expired today, slipped 39 cents to settle at $102.92 on the New York Mercantile Exchange. The futures closed at $103.31 yesterday, the highest level since Oct. 8. April crude, the most active contract, declined 9 cents to $102.75. The volume of all futures traded was 19 percent below the 100-day average at 3:26 p.m.
Brent for April settlement declined 17 cents to $110.30 a barrel on the London-based ICE Futures Europe exchange. Volume was 34 percent below the 100-day average. Brent crude was at a premium of $7.55 to WTI for the same month on ICE, compared with $7.63 yesterday.
U.S. crude supplies rose 973,000 barrels to 362.3 million, the highest level since Dec. 20, the EIA, the Energy Department’s statistical arm, said. Analysts surveyed by Bloomberg had expected a gain of 2.25 million.
Demand for gasoline dropped for a third week, down 3.5 percent to 8.03 million barrels a day. Consumption of distillate fuel, including diesel and heating oil, fell 1.4 percent to 3.62 million.
Gasoline supplies climbed 309,000 barrels to 233.4 million and distillate inventories fell 339,000 to 112.7 million. Analysts had expected a drop of 850,000 in gasoline stockpiles and a 2.1-million-barrel decline for distillate.
The refinery utilization rate slid 0.3 percentage point to 86.8 percent, staying below 90 percent for a fifth week.
“It’s a mixed report,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “You had a build in crude and gasoline and a draw in distillate.”
Inventories at Cushing fell to 35.9 million barrels, the lowest level since Oct. 25, according to the EIA. Supplies have dropped 5.96 million in the past three weeks.
“Cushing continues to drain as the bottlenecks are cleared away,” said Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at Manulife Asset Management in Boston. “The crude build was smaller than expected. Even with a bullish report, there will be headwinds because prices have already risen so much.”
The southern portion of the Keystone XL link began moving oil to the Texas Gulf Coast from Cushing last month. The line was initially flowing at 288,000 barrels a day and will ramp up over the course of the year toward its 700,000-barrel capacity, executives said in a Jan. 22 press conference at the company’s headquarters in Calgary.
Crude inventories in the Gulf, known as PADD 3, rose for a fifth week to 176.1 million barrels.
WTI and Brent also fell as a Chinese manufacturing index decreased to the lowest level in seven months.
The preliminary February reading of 48.3 for a Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics compares with the 49.5 median estimate in a Bloomberg survey. A number below 50 indicates contraction. China is the world’s second-largest oil-consuming country after the U.S.
“There was a disappointing reading in China’s manufacturing, and that kind of triggered profit-taking,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Implied volatility for at-the-money WTI options expiring in April was 15.8 percent, compared with 16.6 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 379,731 contracts at 3:26 p.m. It totaled 681,572 contracts yesterday, 35 percent above the three-month average. Open interest was 1.63 million contracts.