WTI Drops a Third Day; OPEC Output at Five-Month High

West Texas Intermediate crude fell for a third day, the longest run of declines in four weeks, as OPEC boosted output to the highest level in five months.

WTI slid as much as 1.2 percent, and London-traded Brent dropped for a second day. The Organization of Petroleum Exporting Countries produced 30.46 million barrels a day last month, up from 30.18 million in March, the group’s secretariat said May 10. That’s the most since November. Morgan Stanley predicted that the spread between WTI and Brent will widen as U.S. supplies accumulate.

“Even if demand surprises, the market is still likely to remain comfortably supplied,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts that WTI will struggle to surpass $96.80 a barrel this month.

WTI for June delivery fell as much as $1.18 to $94.86 a barrel in electronic trading on the New York Mercantile Exchange and recovered to $95.63 as of 12:55 p.m. London time. The volume of all contracts traded was 1.5 percent below the 100-day average.

Brent for June settlement lost as much as $1.28, or 1.2 percent, to $102.63 on the ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.50 to WTI, the narrowest since January 2011, compared with $7.87 on May 10.

Saudi Output

The gap between WTI and Brent is “near a trough and should widen again, at least marginally, later this year” because of a growing surplus of supply in Houston, Adam Longson, an analyst at Morgan Stanley based in New York, said in a report today.

Saudi Arabia pumped 9.27 million barrels a day in April, up from 9.13 million in March, OPEC’s Vienna-based secretariat said May 10 in its monthly Oil Market Report. That’s the highest since November and compares with the country’s own figure of 9.31 million barrels, based on its communication with the 12-member group.

The kingdom “remains committed to its role as a stable and reliable supplier” that has consistently increased production to offset shortfalls, Saudi Oil Minister Ali Al-Naimi said May 10 in Istanbul, where he traveled to meet Turkey’s energy minister, Taner Yildiz.

“Brent a little over $100 a barrel seems reasonable for the short term,” said Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management. “In the long term, it’s set to come down a little.”

Chinese Factories

China’s industrial production climbed 9.3 percent in April from a year earlier, data from the National Bureau of Statistics in Beijing showed today. That’s below the median estimate of 9.4 percent in a Bloomberg News survey of 38 economists. The country is the world’s second-largest oil consumer and accounted for 11 percent of global demand in 2011, according to BP Plc’s Statistical Review of World Energy.

WTI has technical support along its 100-day moving average, about $93.53 a barrel today, according to data compiled by Bloomberg. Futures on May 10 halted an intraday drop near this indicator, signaling that’s where buy orders may be clustered.

Net-long positions in WTI held by money managers, including hedge funds, commodity pools and trading advisers, increased in the seven days ended May 7, according to the U.S. Commodity Futures Trading Commission. They rose by 10,572 futures and options combined, or 5.5 percent, to 204,534, the regulator said in its Commitments of Traders report on May 10.

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