BLBG:WTI Oil Falls to Lowest This Year as OPEC Crude Output Climbs
West Texas Intermediate oil dropped to the lowest price this year and headed for a second weekly decline as OPEC production rose for the first time in six months and Chinese manufacturing expanded less than forecast.
Futures slid as much as 0.7 percent to $91.43 a barrel in New York, the lowest intraday price since Dec. 31. Output in the Organization of Petroleum Exporting Countries gained 97,000 barrels to an average of almost 30.7 million a day last month, a Bloomberg survey survey of oil companies, producers and analysts showed. China’s manufacturing purchasing managers index fell to 50.1 in February, compared with a median forecast of 50.5. Gasoline pump prices in the U.S. may extend gains after jumping 49 cents a gallon since December, the AAA said.
“On the demand side, the economic news isn’t good enough to suggest that we’re going to easily cope with the current supply levels,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “For West Texas, the trend remains clearly down. The area around $90.40 a barrel is a possible temporary support level.”
WTI for April delivery was down 12 cents at $91.93 a barrel in electronic trading on the New York Mercantile Exchange at 12:58 p.m. Singapore time. The volume of all futures traded was 6 percent above the 100-day average. The contract fell 71 cents to $92.05 yesterday, the lowest close since Dec. 31. Prices are down 1.3 percent this week and poised for the first back-to-back weekly declines since November.
Brent for April settlement dropped 33 cents to $111.05 a barrel on the London-based ICE Futures Europe exchange. Volume was double the 100-day average. The European benchmark grade was at a premium of $19.22 to WTI, up from $19.33 yesterday.
Saudi Output
OPEC crude output climbed as a gain by Libya outweighed a cut by Saudi Arabia, the Bloomberg survey showed. Libyan daily production increased by 130,000 barrels to 1.24 million last month, the biggest gain of any member, after the reopening of the country’s Zueitina export terminal early in February.
Saudi Arabia, OPEC’s biggest oil producer, pumped 9 million barrels a day, the lowest level since May 2011, according to the survey. Output was down 100,000 barrels a day from January and 900,000 barrels from May, when production reached the highest since at least January 1989.
In China, the world’s second-biggest oil consumer, manufacturing slowed last month, the PMI report from the Federation of Logistics and Purchasing in Beijing showed. The reading fell from 50.4 in January. A separate gauge from HSBC Holdings Plc and Markit Economics dropped to a four-month low of 50.4 from 52.3. A level above 50 indicates expansion.
Gasoline Prices
Refinery seasonal maintenance will continue to pressure gasoline prices, AAA, the biggest U.S. motoring organization, said yesterday. The national average for regular gasoline at the pump yesterday was $3.782 a gallon, the highest-ever level for this time of year. February’s average of $3.65 was a record.
Oil’s decline in New York may stall as futures approach technical support along the 100-day moving average, a level where buy orders tend to be clustered. This indicator is around $90.86 a barrel today, according to data compiled by Bloomberg. Crude’s 14-day relative strength index has also dropped to about 34, the lowest in four months. A reading below 30 signals prices have fallen too quickly for further losses to be sustainable.
Spending Cuts
Oil in New York may decline next week after U.S. spending cuts take effect and the country’s crude inventories climbed to a seven-month high, a Bloomberg survey showed. Twenty-one of 37 analysts, or 57 percent, forecast crude will decline through March 8. Twelve respondents, or 32 percent, predicted an increase, and four forecast little change. Last week, 67 percent of analysts projected a decline, the most bearish total since October 2011.
A “seasonal lift” for oil prices may be approaching as Asian refiners boost operations and demand for crude after maintenance work, Credit Suisse Group AG said yesterday in an e- mailed note. Markets “should start to tighten” with the return of about 2 million barrels a day of idled processing capacity, the bank said.
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
