West Texas Intermediate crude rebounded from its lowest closing level in more than a month, narrowing its discount to Brent, amid speculation earlier losses were excessive.
Futures in New York rose as much as 0.6 percent. WTI lost the most in two months yesterday amid the announcement of a test sale of oil from the Strategic Petroleum Reserve, while the Energy Information Administration reported a 6.18 million-barrel jump in crude supplies, triple the median analyst estimate.
“We think the SPR issues is a storm in a tea-cup, given the small size of the release,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by e-mail. There is probably “no connection” between the release and tensions with Russia over Ukraine, he said.
WTI for April delivery gained as much as 61 cents to $98.60 a barrel and was at $98.24 as of 11:59 a.m. London time in electronic trading on the New York Mercantile Exchange. The contract dropped 2 percent to $97.99 yesterday, the biggest decline since Jan. 2 and the lowest close since Feb. 6. The volume of all futures traded was about 26 percent above the 100-day average.
Brent for April settlement slipped 11 cents to $107.91 a barrel on the London-based ICE Futures Europe exchange. The European crude traded at a premium of $9.65 to WTI on ICE. The spread closed at $10.03 yesterday, the widest in six weeks.
WTI slid the past three days, the longest losing streak in more than two months, after data on March 8 showed a slump in China’s exports in February, bolstering speculation of an economic slowdown.
In the U.S., the Energy Department said it’s offering 5 million barrels of sour, or high-sulfur, crude in a test of the nation’s oil-distribution system. The test sale of less than 1 percent of emergency reserves includes similar actions in August 1990 and November 1985.
The Strategic Petroleum Reserve sale is probably a response to the crisis in Ukraine, according to Societe Generale SA. Russian government officials and businessmen are preparing for sanctions resembling those applied to Iran in a possible retaliation from the West for what they see as the inevitable annexation of Ukraine’s Crimea region, according to four people with knowledge of the preparations.
“We don’t believe in coincidences,” Michael Wittner, the head of oil-market research at Societe Generale in New York, said in an e-mailed report. “We do believe that the SPR release is meant as a warning shot across Russia’s bow.”
Chinese industrial production expanded by 8.6 percent in the January-February period from a year earlier, according to the National Bureau of Statistics. A 9.5 percent gain was forecast in a Bloomberg News survey of economists.
“The slowdown in China could have an impact on demand growth, and over time that’s a more important factor for the market” than the SPR release, Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “The timing of the SPR is suspicious and it could be a sign the U.S. wants to say ‘be careful’ ” to Russia over its actions in Ukraine, he said.
Commercially held U.S. crude stockpiles climbed for an eighth week to 370 million barrels in the seven days ended March 7, the highest level since Dec. 13, according to the EIA, the Energy Department’s statistical arm.
“The inventory builds are pointing to an oversupply,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney.
Crude supplies at Cushing, Oklahoma, the delivery point for WTI contracts, shrank by 1.34 million barrels to 30.8 million, a two-year low, the EIA said. Distillate stockpiles, including heating oil and diesel, decreased by 533,000 barrels while gasoline supplies slid by 5.23 million.
WTI has technical support along its lower Bollinger Band, at about $96.25 a barrel, data compiled by Bloomberg show. Futures rebounded from this indicator in mid-January. Buy orders tend to be clustered around chart-support levels.