BLBG:WTI Drops for a Second Day; U.S. Crude Stockpiles Seen Rising
West Texas Intermediate crude slid for a second day amid speculation that U.S. inventories climbed to the highest level in more than 22 years.
Futures declined as much as 0.5 percent in New York. U.S. crude supplies probably increased 2.3 million barrels last week, according to a Bloomberg News survey of analysts before a government report tomorrow. Prices slipped yesterday after data showed U.S. manufacturing grew less than forecast in March. Exxon Mobil Corp. (XOM) is developing an excavation and removal plan for a damaged section of its Pegasus pipeline, which was shut after a leak was discovered in Arkansas on March 29.
“The weakness in West Texas reflects the closing of the Exxon pipeline and a bit of a pause given the moderate manufacturing figures that we’ve seen,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Any decline from here, provided we stay above the previous peaks at about $94, might be more corrective.”
WTI for May delivery declined as much as 45 cents to $96.62 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.81 at 3:23 p.m. Singapore time. The volume of all futures traded was 26 percent below the 100-day average. The contract closed at $97.07 yesterday, the lowest settlement since March 27.
Brent for May settlement was at $110.90 a barrel, down 18 cents, on the London-based ICE Futures Europe exchange. It climbed $1.06, or 1 percent, to $111.08 yesterday. The volume of all futures traded was 39 percent below the 100-day average. The European benchmark grade was at a premium of $14.08 to WTI futures, little changed from $14.01 yesterday.
Pegasus Pipeline
Brent’s premium widened yesterday the most since February as the Pegasus shutdown threatened to exacerbate a glut of oil coming from Canada to the Midwest, depressing U.S. prices relative to European contracts.
Exxon’s 96,000 barrel-a-day Pegasus line runs 940 miles (1,512 kilometers) from Patoka, Illinois, to Nederland, Texas, and serves refineries around Port Arthur and Beaumont, close to the Louisiana line. There are four plants near the cities able to process about 1.4 million barrels a day of crude, according to data compiled by Bloomberg. The sites are operated by Exxon, Valero Energy Corp. (VLO), Total SA and Motiva Enterprises LLC.
U.S. gasoline stockpiles probably slid 1 million barrels last week, according to the median estimate of six analysts surveyed by Bloomberg before an Energy Department report tomorrow. Distillate supplies, a category that includes heating oil and diesel, fell 750,000 barrels, the survey shows.
U.S. Stockpiles
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 Energy Information Administration, the Energy Department’s statistics unit, for its weekly survey.
Demand for crude will remain strong from Asian buyers as the U.S. producers more of its own oil, Saudi Arabian Oil Minister Ali al-Naimi said yesterday in a speech in Doha, Qatar, carried by the official Saudi Press Agency.
Oil output in March by Petroleos Mexicanos, Mexico’s state- owned producer, dropped to the lowest since January 2012, slipping to 2.525 million barrels a day, it said in a report yesterday.
Supply from Pemex’s largest field, Ku-Maloob-Zaap, fell 2.5 percent to 845,000 barrels a day, the company said. It sent 1.1 million barrels daily to its exports terminal last month, according to the report.
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
