West Texas Intermediate declined for a third day after U.S. crude inventories increased while tension in Ukraine continued to ease. Brent was little changed.
Futures dropped as much as 0.9 percent in New York to their lowest intraday level since Feb. 18. Crude stockpiles gained for a seventh week while supplies at Cushing in Oklahoma, the delivery point for WTI contracts, slid to the lowest level in two years with the opening of a new pipeline. European Union leaders quarreled over how to tame Russia after its military moves in Ukraine.
“Crude has been falling since Monday as the geo-political risk drops off,” Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said by phone. “The Ukraine risk premium has disappeared for now as we are at least getting dialogue between Russia and the West.”
WTI for April delivery dropped as much as 89 cents to $100.56 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.67 as of 1:25 p.m. London time. The contract lost $1.88 to $101.45 yesterday, the biggest drop in two months. The volume of all futures traded was about 36 percent more than the 100-day average.
Brent for April settlement was down 30 cents at $107.46 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.80 to WTI on ICE. The spread ended yesterday’s session at $6.31, widening for the first time in seven days.
A summit in Brussels today started with eastern European countries calling for a tough line on the Kremlin and western countries offering Russia more time to pull back its forces in Crimea before imposing sanctions.
U.S. Secretary of State John Kerry and Russia’s Foreign Minister Sergei Lavrov met in Paris in their first face-to-face encounter since Ukrainian president Viktor Yanukovych fled his country during last month’s popular uprising.
The International Energy Agency said it’s “constantly monitoring” oil and gas markets amid the crisis in Ukraine and that the current situation doesn’t call for an IEA response.
WTI has slid 1.5 percent this week, poised for the first decline in eight weeks as U.S. crude supplies climbed to the highest level since December.
Distillate stockpiles increased by 1.41 million barrels in the seven days through Feb. 28, said the EIA, the Energy Department’s statistical arm. They were projected to decline by 1 million barrels, according to the median estimate of nine analysts surveyed by Bloomberg.
“The drop in the price has been magnified amid growing U.S. inventories and decreasing geopolitical risks,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul.
Stockpiles at Cushing, the nation’s largest oil-storage center, slid by 2.66 million barrels to 32.1 million, the EIA reported. TransCanada Corp. began moving crude from the hub to the Texas Gulf Coast in January via the southern portion of its Keystone XL pipeline.
WTI is extending losses after breaching technical support, according to data compiled by Bloomberg. Futures yesterday settled outside the lower boundary of an upward-sloping trend channel going back to mid-January. Investors typically sell contracts when chart support fails.