WTI Crude Falls on Forecast for 10th Weekly Supply Gain

West Texas Intermediate declined for a third day in New York on projections that U.S. crude inventories advanced for a 10th week. WTI’s discount to Brent crude grew to the steepest in eight months.

Futures fell 0.4 percent. Supplies rose 750,000 barrels last week, according to analysts surveyed by Bloomberg before an Energy Information Administration report tomorrow. U.S. crude output reached 7.98 million barrels a day this month, the most since 1989. Prices slid yesterday after Iran and world powers agreed on limits to the country’s nuclear program in exchange for about $7 billion in sanctions relief over six months.

“Crude supplies are very high,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “U.S. production continues to climb to new heights. There could also be some selling on the prospect of additional Iranian barrels that will be on the market because of the agreement.”

WTI for January delivery slipped 41 cents to settle at $93.68 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 46 percent below the 100-day average at 4:36 p.m. Prices are up 2 percent this year.

Prices fell from the settlement after the American Petroleum Institute reported supplies rose 6.92 million barrels last week. WTI declined 57 cents, or 0.6 percent, to $93.52 a barrel at 4:36 p.m. in electronic trading. It was $93.84 before the report was released at 4:30 p.m.

Brent crude for January settlement decreased 12 cents to end the session at $110.88 a barrel on the London-based ICE Futures Europe exchange. Volume was 11 percent lower than the 100-day average.

Widening Spread

The European benchmark grade closed at a $17.20 premium to WTI, the widest spread at settlement since March 11.

“The spread is widening in large part because there’s a lot of supply here in the U.S.,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

WTI declined in the six weeks through Nov. 15, the longest losing streak in 15 years, as U.S. crude inventories expanded amid a surge in production. Stockpiles have risen to 388.5 million barrels, the most since June, according to the EIA, the Energy Department’s statistical arm.

“The EIA numbers are the most important thing in the market right now,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “All eyes will be on the crude number and whether the long run of supply gains continues.”

Distillate Inventories

Supplies of distillate fuel, a category that includes heating oil and diesel, probably dropped 1 million barrels to 111.5 million, the least since May 2008, according to the median estimate of 11 analysts. Gasoline stockpiles climbed by 500,000 barrels in the seven days ended Nov. 22, the survey showed.

Ultra-low-sulfur diesel for December delivery rose 1.23 cents, or 0.4 percent, to $3.0444 a gallon in New York. It was the highest settlement since Oct. 10. December gasoline increased 0.62 cent to end the session at $2.6869.

Demand for distillate fuels in the four weeks ended Nov. 15 averaged 4.2 million barrels a day, the most in two years, the EIA, the Energy Department’s statistical arm, said last week. Total petroleum consumption increased to 20.3 million, the most since August 2008.

“Robust underlying demand suggests that it is not all doom and gloom out there,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd. in London.

The API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines, while the government requires that reports be filed with the EIA.

Nuclear Agreement

Brent lost as much as 2.7 percent in intraday trading yesterday after the interim accord was reached with Iran on Nov. 24 in Geneva. Brent closed down 5 cents at $111 a barrel.

Crude exports from Iran, a member of the Organization of Petroleum Exporting Countries, will be held at about 1 million barrels a day under sanctions that remain in force, according to the White House.

The six-month agreement, which offers Iran about $7 billion in relief from penalties in exchange for curbs on its nuclear program, leaves in place banking and financial measures that have hampered its crude exports.

“Investors are trying to sort out what impact the Iran agreement will have on the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.

Iranian Exports

Iran shipped 715,000 barrels a day in October, down from 1.26 million in the previous month, the International Energy Agency said in its monthly report on Nov. 14. Exports averaged 1.1 million barrels a day in the first nine months of this year, according to the energy adviser to developed nations.

Implied volatility for at-the-money WTI options expiring in January was 16.9 percent, down from 17.7 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 290,781 contracts as of 4:37 p.m. It totaled 532,391 contracts yesterday, 6.8 percent below the three-month average. Open interest was 1.64 million contracts.