WTI Drops a Third Day as U.S. Crude Supplies Seen RisingGrant Smith
West Texas Intermediate traded near its lowest closing level in three days amid signs of expanding U.S. supplies and as the International Energy Agency trimmed demand estimates for OPEC’s crude.
WTI fluctuated after losing 0.4 percent yesterday to settle at its lowest price since June 6. U.S. Energy Department data today may show crude inventories in the world’s largest oil-consuming nation dropped 1.5 million barrels last week, according to a Bloomberg News survey. The IEA trimmed forecasts for the amount of oil OPEC needs to supply in the second half of the year on signs of slower Chinese growth.
“Gloomier overall sentiment is weighing on prices,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “There was not much positive for the market in today’s IEA report. The supply risks, however, should further support the prices.”
WTI for July delivery traded 8 cents lower at $95.30 a barrel in electronic trading on the New York Mercantile Exchange as of 1:45 p.m. London time, after declining as much as 92 cents to $94.46. The volume of all futures traded was 25 percent below the 100-day average. The contract lost 39 cents to close at $95.38 yesterday.
Brent for July settlement gained 7 cents to $103.03 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.72 to WTI. The spread narrowed for a fifth day yesterday to close at $7.58.
The Organization of Petroleum Exporting Countries will need to provide an average of 29.8 million barrels a day in the second half of the year, the IEA said today in its monthly market report, trimming the forecast in its previous report by 200,000 barrels a day. That would require OPEC to cut output by 1.1 million barrels from the 30.9 million it pumped in May, according to the IEA. The agency kept its estimates for global oil demand for this year unchanged.
Oil use will increase worldwide by 785,000 barrels a day, or 0.9 percent, to 90.6 million a day as “relatively sluggish macroeconomic conditions are expected to keep a lid on growth,” the IEA said.
The report from the Energy Information Administration, the Energy Department’s statistical unit, is projected to show that gasoline supplies increased by 500,000 barrels, according to the median estimate of 11 analysts in the Bloomberg survey. The report is due for release at 10:30 a.m. in Washington.
The industry-funded American Petroleum Institute said yesterday that crude supplies rose by 8.97 million barrels last week, the biggest gain since January 2009. U.S. gasoline inventories climbed 1.04 million barrels, the API said.
The API in Washington collects the 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.
-- Editors:Bruce Stanley, John Buckley