BLBG:WTI Oil Heads for Two-Week High; Brent Spread at Seven-Week Low
West Texas Intermediate oil rose, heading for the highest settlement in two weeks and shrinking Brent crude’s premium to the U.S. benchmark grade to the narrowest in almost two months.
WTI futures climbed as much as 0.5 percent in New York, while Brent was little changed in London. The differential between the two grades shrank after an Energy Department report yesterday showed supplies at Cushing, Oklahoma, the delivery point for Nymex futures, fell the most since May 2011. Total U.S. crude stockpiles climbed to the highest for the time of year in records dating back to 1982.
Stockpile builds are likely to continue “until we see the U.S. in full recovery mode,” said David Lennox, an analyst at Fat Prophets in Sydney. “We can’t see any reason for the oil price to gain unless there is a supply-shock event. There’s been no dynamic change in demand.”
WTI for April delivery rose as much as 50 cents to $93.02 a barrel in electronic trading on the New York Mercantile Exchange and was at $93 at 4:21 p.m. Singapore time. The volume of all futures traded was in line with the 100-day average. The contract lost 2 cents yesterday after climbing to $92.54 on March 12, the highest settlement since Feb. 27.
Brent for May settlement, the most actively traded contract, was up 29 cents at $108.53. The April contract, which expires today, was 34 cents higher at $108.86. It slid $1.13 yesterday to $108.52, the lowest since Dec. 17. The volume of all futures was 50 percent below the 100-day average.
Brent-WTI Spread
Brent’s premium to WTI futures was at $15.86. The spread narrowed to $16 yesterday, the smallest gap since Jan. 22. Stockpiles at Cushing, the U.S.’s biggest crude-trading hub, dropped 1.53 million barrels last week, the biggest decline since the week ended May 13, 2011, to 49.3 million.
The differential will average $7.50 a barrel this year as U.S. refineries end maintenance and new pipeline capacity reduces a glut at Cushing, Goldman Sachs Group Inc. said in a March 11 report.
Brent may extend losses after breaching long-term technical support yesterday. Futures settled below the 200-day moving average for the first time since Dec. 24, according to data compiled by Bloomberg. This indicator is at $109.42 a barrel today. Prices fell 4 percent over two weeks after dropping below the same indicator on Oct. 19. Investors typically sell contracts when chart support fails.
U.S. Inventories
U.S. crude stockpiles climbed 2.6 million barrels to 384 million last week, according to the report from the Energy Information Administration, the Energy Department’s statistical arm. They were forecast to increase 2.3 million barrels in a Bloomberg News survey of analysts. Daily crude output climbed by 66,000 barrels to 7.16 million, the EIA said.
Gasoline inventories fell 3.6 million barrels, the EIA said. They were projected to slip by 1.2 million, according to the median estimate of 11 analysts in the Bloomberg survey. Distillate supplies, a category that includes heating oil and diesel, rose 83,000 barrels, compared with a forecast drop of 2 million in the survey.
The International Energy Agency yesterday curbed its estimate for global oil consumption for a second month. The Paris-based IEA reduced its 2013 prediction by 60,000 barrels to 90.6 million a day, citing “elusive” economic growth. Demand this year is still expected to rise by 820,000 barrels a day, or 0.9 percent, the agency said.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net
