West Texas Intermediate dropped to its lowest intraday level in almost five weeks, widening its discount to Brent amid rising crude inventories in the U.S.
WTI declined as much as 1.8 percent in New York, expanding the discount to the European benchmark to $9 a barrel for the first time since Feb. 17. Crude stockpiles grew by 2.63 million barrels last week, the American Petroleum Institute said yesterday. An Energy Information Administration report today may show supplies climbed by 2 million, according to a Bloomberg News survey of analysts. Brent’s losses were capped amid instability in Libya, holder of Africa’s biggest reserves.
“You have rising inventories, especially crude inventories, in the U.S.,” Andy Sommer, an analyst at Axpo Trading AG in Dietikon, Switzerland, said by phone. “The refinery maintenance season, which is pretty heavy in the U.S., is ahead of us. The forecast is for normal weather, that means a bit more supply because in frozen soil you can’t really drill. In Libya, the situation is very confused, that holds Brent prices up to a certain extent.”
WTI for April delivery declined as much as $1.82 to $98.21 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Feb. 7, and was at $98.33 at 9:03 a.m. New York time. The volume of all futures traded was almost double the 100-day average.
Brent for April settlement decreased as much as 88 cents, or 0.8 percent, to $107.67 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of as much as $9.57 to WTI on ICE, the most since Feb. 10.
Ali Zaidan was ousted as Libya’s prime minister by lawmakers yesterday, the culmination of a campaign by Islamists and other opponents to terminate his 17 months in office.
The premier’s fall followed an escalation in the campaign by separatists in the eastern Barqa region, who loaded a North Korean-flagged tanker with crude. The Morning Glory had arrived in Es Sider, Libya’s largest export terminal, on March 8 without government permission.
Total crude production from the Organization of Petroleum Exporting Countries increased by 258,600 barrels a day in February to 30.1 million, the highest level since August, as Iraq compensated for reductions in Libya and Saudi Arabia, the group said in its monthly oil report today. OPEC output is in line with its current collective target of 30 million barrels a day. Iraq’s output rose to the highest since 1980.
In the U.S., crude stockpiles at Cushing, Oklahoma, the nation’s largest oil-storage hub and the delivery point for WTI contracts, shrank by 1.31 million barrels in the week ended March 7, the API reported yesterday.
Distillate inventories, including heating oil and diesel, fell by 839,000 barrels, said the industry group in Washington. The EIA will probably report that supplies declined by 450,000 barrels, according to the median estimate of 10 analysts in the Bloomberg survey.
The API collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey, which is scheduled for release at 10:30 a.m. in Washington.
WTI is extending losses after settling below its middle Bollinger Band yesterday, according to data compiled by Bloomberg. Futures declined to the lower band after a similar breach of technical support in early January. This indicator is at about $96.30 a barrel today. Investors typically sell contracts when chart-support levels fail.