WTI Crude Trades Near Four-Week Low as Supplies IncreaseRupert Rowling
West Texas Intermediate crude slid near a four-week low, headed for a second month of declines, as investors bet signs of continued U.S. economic growth will strengthen the case for reduced stimulus.
Futures dropped as much as 0.9 percent in New York after falling 2 percent yesterday. U.S. Commerce Department data showed the biggest oil-consuming country maintained growth in the first quarter, feeding speculation that the Federal Reserve will taper its debt-buying program as the recovery continues. A report today may indicate oil supplies shrank, a Bloomberg News survey showed. OPEC ministers meet tomorrow to decide the group’s output policy.
“With the U.S. also looking like pulling back liquidity from the market, people are worried about future growth in the world’s two largest economies,” said Thina Saltvedt, an Oslo-based analyst at Nordea Bank AB, who believes the Organization of Petroleum Exporting Countries will maintain its current production target.
WTI for July delivery was at $92.59 a barrel in electronic trading on the New York Mercantile Exchange, down 54 cents, at 1:47 p.m. London time. The contract fell $1.88 to $93.13 yesterday, the lowest close since May 1. Futures have lost 0.9 percent this month after a 3.9 percent drop in April.
Brent for July settlement was down 64 cents at $101.79 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $9.19 to WTI futures. The spread was $9.30 yesterday, the widest based on closing prices since May 15.
Revised data from the Commerce Department showed the U.S. economy grew at a 2.4 percent annualized rate in the first three months of this year, 2 percentage points faster than the previous quarter.
Other U.S. data may show an index of pending house sales increased 1.5 percent in April, matching a gain the previous month, economists forecast before a report today at 10 a.m. Washington time from the National Association of Realtors.
OPEC, which supplies about 40 percent of oil globally, is expected to keep its output target at 30 million barrels a day when ministers meet tomorrow in Vienna, two delegates said on May 28, asking not to be identified because the decision isn’t yet final. All but one of 20 analysts in a Bloomberg News survey predicted the 12-member group will maintain its official limit.
Kuwait’s OPEC Governor Siham Razzouqi said today she sees no reason to change the production target. Saudi Arabia’s Oil Minister Ali al-Naimi said yesterday the market is balanced and stable and that current prices are suitable for producers and consumers, according to the state-run Saudi Press Agency.
Oil may stay around $100 a barrel in the short term, Karim Djoudi, the Algerian finance minister, said in an interview at the African Development Bank annual meeting in Marrakech, Morocco. Algeria is boosting production capacity and will have spare output to respond to any increase in demand, he said yesterday.
U.S. crude inventories probably slid 500,000 barrels last week, according to the median estimate of 11 analysts in a Bloomberg survey before the Energy Information Administration releases data today. The report is being released a day late because of the Memorial Day holiday on May 27.
The American Petroleum Institute said yesterday that crude inventories rose by 4.4 million barrels in the seven days to May 24 for a fifth weekly gain. Gasoline supplies rose 1.9 million barrels, the API said. The figures from the EIA, the Energy Department’s statistical arm, are forecast to show a drop of 500,000 barrels. Distillate stockpiles, including heating oil and diesel, climbed 3.1 million barrels in the API report. They are projected to decrease by 450,000 barrels in the survey.
The IMF said yesterday that China’s economy will expand 7.75 percent this year and next, down from an April forecast of 8 percent for 2013 and 8.2 percent in 2014.
“It’s clear at the moment we have a bias to the downside, with concerns about global growth and increasing inventory numbers equaling lower prices,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney, who predicts that OPEC will cut its production limit.
WTI has technical support along its middle Bollinger Band on the weekly chart, according to data compiled by Bloomberg. This indicator, at about $92.31 a barrel today, is near where futures halted declines the past two weeks. Buy orders tend to be clustered around chart-support levels.