WTI Trades Near Six-Month Low on U.S. Crude StockpilesGrant Smith and Edward Welsch
West Texas Intermediate traded near the lowest price in almost six months and at the steepest discount to Brent since March, as crude stockpiles climbed for a 10th week in the U.S. and production rose.
Futures were little changed in New York after declining 1.5 percent yesterday, the most in two weeks. Crude inventories climbed by 2.95 million barrels to 391.4 million, the highest level since June, Energy Information Administration data show. Supplies were forecast to increase by 750,000 barrels, according to a Bloomberg survey. Oil’s moving averages have formed a “death cross,” a bearish technical signal.
“The WTI market has come under pressure as domestic production continues to increase and compete with imports, and it’s remained difficult for the industry to reduce crude oil inventories,” said Andy Lipow, president of Lipow Oil Associates LLC, a Houston-based energy consulting company.
WTI for January delivery was at $92.25 a barrel in electronic trading on the New York Mercantile Exchange, down 5 cents, as of 1:31 p.m. The contract slid $1.38 to $92.30 yesterday, the lowest close since May 31. The volume of all futures traded was 93 percent below the 100-day average. Prices have dropped 4.3 percent in November. Floor trading is closed today because of the U.S. Thanksgiving holiday.
Brent for January settlement slipped 45 cents to $110.86 a barrel on the London-based ICE Futures Europe exchange. Prices are up 1.9 percent this month. The contract was at a premium of $18.61 to WTI, compared with $19.01 yesterday, the widest spread in more than eight months based on closing prices.
WTI fell in the six weeks through Nov. 15, the longest losing streak in 15 years, as U.S. crude inventories expanded amid a production surge. Output increased by 45,000 barrels a day to 8.02 million in the seven days ended Nov. 22, the most in almost 25 years, the EIA said.
“Over the next couple of weeks we could see $90 for WTI,” Lipow said in a telephone interview from Houston. “That’s in spite of my expectation that inventories will decline over the next few weeks as refiners continue to operate at historically high utilization rates for this time of year.”
Refinery utilization rates increased by 0.8 percentage point last week to 89.4 percent, the highest level for this time of year since 2007, according to data from the EIA, the Energy Department’s statistical arm.
Stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub and delivery point for WTI contracts, rose for a seventh week to 40.6 million barrels, the highest level since July, the EIA said.
Gasoline inventories climbed by 1.75 million barrels after declining six weeks, the data show. Supplies were projected to increase by 500,000 barrels, according to the median estimate of 11 analysts in the Bloomberg survey. Distillate fuels, including heating oil and diesel, dropped by 1.67 million barrels, compared with a forecast decrease of 1 million.
WTI’s 50-day moving average, at $98.26 a barrel today, slid below the 200-day mean for the first time since the end of January, according to data compiled by Bloomberg. Investors typically sell contracts on a “death cross.”
Brent, the benchmark grade for half the world’s crude, advanced for the first time in three days yesterday as Libya’s bid to recover production was hampered by clashes in the eastern region, where the nation pumps more than 60 percent of its oil. The fighting in Benghazi between the army and Islamists prompted a call by Prime Minister Ali Zaidan for militias to hand over weapons, leave cities and reopen ports.
Libya, the holder of Africa’s largest oil reserves, is a member of the Organization of Petroleum Exporting Countries. The group will reaffirm its collective production quota of 30 million barrels a day, set two years ago, when its 12 members meet on Dec. 4 in Vienna, according to 22 of 24 analysts and traders surveyed by Bloomberg News this week.