BLBG: Crude Drops After Biggest Gain in Six Weeks on Supply Outlook
Oil fell following the biggest gain in six weeks as supplies in the U.S., the world’s biggest crude consumer, were forecast to climb to a seven-month high.
Futures slid as much as 1 percent after a Bloomberg News survey showed stockpiles probably gained 1.9 million barrels, or 0.5 percent, last week to 355.3 million, the highest level since August, in an Energy Department report tomorrow. Prices advanced yesterday after U.S. manufacturing in March expanded at a faster pace than estimated.
“An increase in inventories would be bearish, partly because it suggests that demand is not quite strong,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “After the big run-up yesterday people are selling off a little bit.”
Oil for May delivery fell 38 cents, or 0.4 percent, to $104.85 a barrel at 9:23 a.m. on the New York Mercantile Exchange. It climbed 2.1 percent yesterday, the most since Feb. 21. Prices are 6.2 percent higher this year.
Brent crude for May settlement rose 10 cents to $125.53 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $20.68, widening from $20.20 yesterday, the biggest spread since October, based on settlement prices.
Eight of the nine analysts in the Bloomberg survey this week forecast an increase in stockpiles.
Crude inventories grew by 7.1 million barrels to 353.4 million in the week ended March 23, the largest increase since July 2010, the Energy Department reported on March 28. Supplies have gained in five of the past six weeks.
‘No Shortage’
“There’s no immediate shortage of supplies,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts U.S. oil will struggle to rally beyond $107 a barrel. “Today there’s small-scale profit-taking after last night’s rally. The upside is also limited on demand concerns.”
U.S. fuel demand dropped 0.1 percent to 18.2 million barrels a day in the four weeks ended March 23, according to the Energy Department. It was down 5.3 percent from the same period a year earlier.
The American Petroleum Institute will release separate inventory data today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
