BLBG:WTI Drops to Seven-Week Low; U.S. Crude Supplies Seen Increasing
West Texas Intermediate oil fell to a seven-week low before a report that may show U.S. crude stockpiles rose. Prices slid with stocks and the euro as Italy’s election spurred concern Europe’s debt crisis will worsen.
Futures declined as much as 1.3 percent to $91.92 a barrel, the lowest intraday price since Jan. 4. U.S. crude supplies probably climbed to a seven-month high, a Bloomberg News survey showed before Energy Information Administration data tomorrow. Iran resumes talks on its nuclear program today, with the U.S. and its partners seeking a long-term agreement in exchange for lifting sanctions. Candidates seeking to reverse Italy’s austerity measures won about 55 percent of the popular vote in the nation’s election.
“We’re likely to see stabilization around these levels but $90 a barrel could be a bit of a test if we get there,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “It would take a convincing push to get it through that if it were to fall further. The potential for the lifting of sanctions on Iran has put pressure on Brent.”
WTI for April delivery was down 90 cents, or 1 percent, at $92.21 a barrel in electronic trading on the New York Mercantile Exchange at 3:37 p.m. Singapore time. The volume of all futures traded was 10 percent higher than the 100-day average. Prices slid 2 cents to $93.11 yesterday.
Brent oil for April settlement on the London-based ICE Futures Europe exchange decreased as much as $1.14, or 1 percent, to $113.30 a barrel. The volume was 70 percent higher than the 100-day average. The European benchmark crude was at a premium of $21.31 to WTI contracts, from $21.33 yesterday.
Fuel Supplies
U.S. crude inventories probably rose 2.5 million barrels last week to 378.9 million, the highest level since July 20, according to the median estimate of eight analysts surveyed by Bloomberg. That would be a sixth weekly gain, the longest rising streak since May. Gasoline supplies fell 1 million barrels while distillate fuels, including heating oil and diesel, dropped by 1.55 million, the survey showed.
The industry-funded American Petroleum Institute is scheduled to 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 EIA, the Energy Department’s statistics unit, for its weekly survey.
Iran, which is under a Western embargo on its oil exports, will meet the U.S., China, France, Germany, Russia and the U.K. today in Almaty, Kazakhstan, after an eight-month lull.
‘Listening Mode’
A diplomatic solution to the standoff over Iran’s nuclear program is possible, U.S. Secretary of State John Kerry said in London. There is a path forward to the lifting of sanctions on Iran’s oil sales, according to U.S. officials who asked not to be identified because of the sensitivity of the issue.
Iranian officials, who spoke on condition of anonymity because they weren’t authorized to comment publicly, said they had returned to talks in a listening mode. They stipulated that Iran will reject any offer that doesn’t recognize what they state is their country’s right under international treaty to enrich uranium for peaceful civilian use.
In Italy’s election, former premier Silvio Berlusconi won a blocking minority in the Senate and former comedian Beppe Grillo’s party got 25 percent support in its first national contest. Both men campaigned to reverse the austerity implemented by incumbent Premier Mario Monti to contain the region’s financial crisis. The European Union accounted for about 16 percent of the world’s oil consumption in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.
WTI is accelerating losses as a measure of technical momentum declines. The moving-average convergence divergence indicator yesterday fell below zero for the first time since Dec. 19, according to data compiled by Bloomberg. The drop may extend to the 100-day moving average, around $90.80 a barrel today. Buy orders tend to be clustered near chart-support levels.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
