WTI Crude Falls to Trade Near Four-Month Low on U.S. Supply Gain

West Texas Intermediate dropped for a third day, trading near a four-month low, as U.S. crude stockpiles gained for a sixth week and speculation mounted that the Federal Reserve may reduce financial stimulus.

Futures lost as much as 0.7 percent, heading for a second monthly decline, as the dollar strengthened on signs the Fed may curtail bond purchases and of an interest-rate cut by the European Central Bank. Crude inventories rose by 4.1 million barrels to 383.9 million last week, the highest level since June, the Energy Department said yesterday. Libya removed a restriction on exports from its Hariga oil-export terminal, the OPEC member’s state-run National Oil Corp. said.

Crude inventories showed an “unexpectedly large U.S. build,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London. “Refinery utilization remains significantly below summer peaks, reflecting the impact of ongoing refinery maintenance. Indigenous production has been increasing for some time by more than refinery demand.”

WTI for December delivery dropped as much as 71 cents to $96.06 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.21 at 12:56 p.m. London time. The contract fell 1.5 percent to $96.77 yesterday, the lowest close since June 28. The volume of all futures traded was about 7 percent below the 100-day average. Prices have slid 6 percent in October after losing 4.9 percent in September.

Brent for December settlement was down 30 cents at $109.56 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $13.17 to WTI. The spread was $13.09 yesterday, the widest since April 2.

ECB Speculation

The euro fell the most in nine weeks versus the dollar after the inflation rate in the European single-currency region dropped unexpectedly, fuelling speculation the ECB will cut rates to spur the recovery. It was at $1.3642 against the U.S. currency at 12:41 p.m.

The Fed’s Open Market Committee said after its two-day meeting ended yesterday that it sees improvement in economic activity while committing to maintain monthly bond purchases.

U.S. refineries operated at 87.3 percent of capacity, up 1.4 percentage points from the prior week. Utilization rates usually peak during the summer months when U.S. gasoline demand rises and decline in September and October, EIA data showed.

Cushing Inventories

Crude inventories at Cushing, Oklahoma, the largest U.S. oil-storage hub and the delivery point for WTI futures contracts, rose by 2.2 million barrels to 35.5 million, the EIA said yesterday. That’s the biggest volume gain since December and the highest level since August.

Libya’s Sharara field may restart within 10 days, Salah A. Ben Ali, manager of international cooperation at the Oil and Gas Ministry, said today at a conference in Singapore. The field was pumping about 330,000 barrels a day before it was shut by minority Tuareg protesters this week. The nation’s production slumped as a result, with output now at 350,000 to 400,000 barrels a day, Ibrahim Al Awami, the oil ministry’s head of measurement and inspection, said today by telephone from the central port of Ras Lanuf.

Libya, a member of the Organization of Petroleum Exporting Countries, has a capacity to pump 1.6 million barrels a day, according to data compiled by Bloomberg.

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