BLBG:WTI Crude Rebounds; Set for Biggest Weekly Drop Since December
West Texas Intermediate rebounded from the lowest level since December, trimming the largest weekly decline in more than two months. U.S. crude stockpiles increased a fifth week, the longest stretch of gains since May.
Futures climbed as much as 0.7 percent after German business confidence rose more than economists forecast to a 10- month high in February. Crude inventories increased 4.1 million barrels last week, the Department of Energy said yesterday. Stockpiles were forecast to gain by 2 million barrels.
“We are seeing the market correct after the sharp drop yesterday,” Thina Saltvedt, an analyst at Nordea Bank AG, said by phone today from Oslo. “There have been some better macro- indicators from the U.S. and the euro zone too.”
WTI for April delivery rose as much as 64 cents to $93.48 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.05 at 10:06 a.m. London time. The contract fell to $92.84 yesterday, the lowest settlement since Dec. 31. The volume of all futures traded was 29 percent above the 100-day average. Prices are down 2.9 percent this week and set for the second weekly drop in three.
Brent crude for April settlement climbed as much as 1.3 percent to $114.79 a barrel on the London-based ICE Futures Europe exchange. It fell $2.07 to $113.53 yesterday. The volume was 35 percent higher than the 100-day average. The European benchmark grade was at a premium of $21.33 to WTI. The gap expanded to $23.18 on Feb. 8, the widest since Nov. 26.
Business Confidence
German business confidence rose, adding to signs that Europe’s largest economy is gathering strength.
The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, climbed to 107.4 from 104.3 in January. That’s the fourth straight gain. Economists predicted an increase to 104.9, according to the median of 38 forecasts in a Bloomberg News survey.
The rally in crude prices earlier this month was driven by renewed optimism in economic growth rather than “hard demand data,” according to Goldman Sachs Group Inc. Brent rose to $119.17 a barrel on Feb. 8, the highest level in nine months.
“The current sell-off in oil is bringing prices more in line with the underlying fundamentals,” Jeffrey Currie, the bank’s head of commodities research in New York, said in a report e-mailed today.
U.S. crude stockpiles rose to 376.4 million barrels, the highest since July, according to the Energy Department. Supplies at Cushing, Oklahoma, the delivery point for WTI, were up 417,000 barrels to 50.7 million.
Gasoline Stockpiles
Gasoline inventories decreased 2.9 million barrels last week, the Energy Department said. They were projected to fall 900,000 barrels in the Bloomberg survey. Distillate stockpiles, including heating oil and diesel, slid 2.3 million barrels, compared with a forecast 1.8 million decline.
U.S. oil production advanced to the highest since 1992, the report showed.
WTI may fall next week as slowing demand boosts inventories, a separate Bloomberg News survey showed. Twenty of 30 analysts and traders, or 67 percent, forecast crude will drop through March 1. Five respondents, or 17 percent, predicted a gain. Five said there would be little change. Last week, 48 percent of those surveyed projected a decrease.
Futures in New York may decline after breaching support at the 50-day moving average, according to a technical analysis by Bill Baruch, a senior market strategist at Iitrader.com in Chicago. The April contract may move toward the 200-day moving average around $92.22 a barrel, he said. It settled yesterday below the 50-day mean for the first time since Dec. 18.
To contact the reporters on this story: Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net; Rupert Rowling in London at rrowling@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
