WTI Crude Fluctuates, Discount to Brent Narrows on SeawayGrant Smith
West Texas Intermediate fluctuated, while its discount to North Sea Brent narrowed after Enterprise Products Partners LP said supplies through its Seaway oil pipeline will increase.
Futures were little changed after advancing by the most since Feb. 11 in New York yesterday. Seaway volume will average 295,000 barrels a day from February to May, compared with 180,000 barrels last month, according to Enterprise. The Federal Reserve will release minutes of its January meeting today. U.S. crude stockpiles probably climbed a fifth week, according to a Bloomberg News survey before a government report tomorrow.
“We expect subdued, macro-driven action with some attention on the January Federal Open Markets Committee tonight,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts that WTI will struggle to surpass $98 a barrel this month.
WTI for March delivery, which expires today, dropped as much as 22 cents $96.44 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $96.79 at 12:59 p.m. London time. The contract advanced 80 cents to $96.66 yesterday. The more active April contract advanced 10 cents to $97.20. The volume of all futures traded was 7 percent above the 100-day average.
Brent for April settlement on the London-based ICE Futures Europe exchange was at $117.13 a barrel, down 39 cents. The volume was 26 percent below the 100-day average. The European benchmark crude was at a premium of $19.92 to WTI, from $20.42 yesterday. The gap expanded to $23.18 on Feb. 8, the widest since Nov. 26.
WTI slid by 7.1 percent in 2012 as the U.S. shale boom deepened a glut at Cushing, Oklahoma, America’s biggest storage hub and the delivery point for the New York contract. The expansion of the Seaway pipeline, which runs from Cushing to the Gulf Coast, was intended to help reduce that surplus.
The forecasts on Seaway volumes stem from a Feb. 15 testimony to the Federal Energy Regulatory Commission from William Ordemann, senior vice president at Enterprise.
The Fed is scheduled to issue the minutes of its Jan. 29-30 meeting at 2 p.m. in Washington, which may provide details on when it plans to start trimming stimulus measures. The U.S. central bank said on Jan. 30 it is committed to buying about $85 billion of government and mortgage securities a month to support growth. Minutes of the Fed’s Dec. 11-12 gathering showed members divided between a mid- or end-of-year finish to bond purchases.
The Energy Information Administration is scheduled to release its weekly report at 11 a.m. tomorrow in Washington, one day later than normal because of the Presidents Day holiday on Feb. 18.
U.S. crude supplies probably gained 2 million barrels last week to 374.2 million barrels, according to the median estimate of nine analysts surveyed by Bloomberg. It would be the longest streak of increases since May.
The amount in storage for the week ended Feb. 8 was about 11 percent higher than the five-year average for the period, according to data compiled by Bloomberg.
Gasoline stockpiles probably fell by 900,000 barrels, the survey shows. Distillate inventories, a category that includes diesel and heating oil, are expected to have dropped 1.5 million barrels for a fourth week of declines.
The industry-funded American Petroleum Institute will publish separate inventory data today.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistics unit, for its weekly survey.
WTI rebounded yesterday after failing to breach technical support around $95 a barrel, data compiled by Bloomberg show. This level is the trough between a “double-top” formed after futures halted advances near $98 on Jan. 31 and Feb. 13. Buy orders tend to be clustered near chart-support levels.
Brent crude will decrease in the second quarter on seasonally weaker demand, according to Morgan Stanley. As the oil market may tighten over the second half of this year, investors should use “any material sell-off as a buying opportunity,” Adam Longson, a New York-based commodity analyst at the bank, said in an e-mailed report today.