BLBG:Brent Oil Rebounds From Three-Month Low; Premium to WTI Widens
Brent oil rebounded from the lowest level in three months, widening its premium to West Texas Intermediate crude for the first time in four days.
Brent futures rose as much as 0.7 percent after sliding 1.9 percent yesterday, the biggest decline since November. WTI climbed from a one-week low. Brent’s premium fell to the narrowest in almost eight months yesterday after Cyprus rejected a bank levy linked to a bailout, sparking concern Europe’s debt crisis will worsen. U.S. crude stockpiles slid 413,000 barrels last week, according to the industry-funded American Petroleum Institute. A government report today is forecast to show inventories increased for a ninth week.
“Some people are betting that we’ve got a low point here and are getting back into the market,” said Victor Shum, the managing director of IHS Consulting in Singapore. “I still expect some volatility, but what’s stopping a further slide is that enough people in the market believe that the Cyprus situation will get resolved.”
Brent for May settlement on the London-based ICE Futures Europe exchange climbed as much as 73 cents to $108.18 a barrel and was at $108.14 at 2:48 p.m. Singapore time. The volume of all futures was down 22 percent from the 100-day average. Prices slid $2.06 yesterday to $107.45, the lowest close since Dec. 10. The European benchmark grade was at a premium of $15.23 to WTI for the same month after falling to $14.93 yesterday, the narrowest gap since July 24.
Technical Bounce
WTI for April delivery, which expires today, gained 41 cents to $92.57 a barrel in electronic trading on the New York Mercantile Exchange. The more-actively traded May future was up 39 cents at $92.91. The volume of all futures was 39 percent below the 100-day average. The front-month contract lost $1.58 to $92.16 yesterday, the lowest since March 11.
Brent crude is rebounding as a technical indicator shows yesterday’s drop was unsustainable, data compiled by Bloomberg show. The 14-day relative strength index fell below 30, a level that signals futures are oversold. The reading is 33.3 today.
WTI has chart resistance along its middle Bollinger Band, around $93.60 a barrel today, according to data compiled by Bloomberg. Futures yesterday traded near this indicator for a third day without settling above it, signaling a level where sell orders may be clustered.
The European Central Bank, whose Governing Council meets today in Frankfurt, will have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s lenders. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to cobble together a new rescue package.
Bank Levy
“There’s a big question on the level of recovery, how fast it will happen or whether it’s stalling,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney.
The Cypriot parliament rejected an unprecedented levy on bank deposits aimed at raising 5.8 billion euros ($7.5 billion) in return for 10 billion euros in external aid. The European Union accounted for 16 percent of the world’s oil demand in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.
Crude stockpiles at Cushing, Oklahoma, the largest U.S. oil-storage hub and the delivery point for New York-traded futures, shrank by 289,000 barrels last week to 49 million, the lowest level this year, the API data showed.
An Energy Department report today may show total U.S. crude supplies increased 2 million barrels last week to 386 million barrels, the highest level since July, according to the median estimate of 11 analysts surveyed by Bloomberg News.
Fuel Supplies
U.S. gasoline inventories increased 278,000 barrels last week, the API data show. They are forecast to decrease 2 million barrels in the government report. Distillate stockpiles, including heating oil and diesel, dropped 1.3 million barrels, compared with a projected 1 million barrel decline in the survey.
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 Information Administration, the Energy Department’s statistics unit, for its weekly survey.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net
