West Texas Intermediate fell for the second time in three days after data showed U.S. crude stockpiles rose the most in four weeks and a government order prevented the restart of a pipeline to the Texas Gulf Coast.
Futures slid as much as 0.7 percent in New York after gaining 0.1 percent yesterday. Crude inventories climbed 4.7 million barrels last week, the most since the seven days ended March 1, according to data from the American Petroleum Institute. A government report today may show supplies increased 2.1 million barrels. Exxon Mobil Corp.’s Pegasus pipeline, which runs from the U.S. Midwest to Texas refineries, will remain shut until regulators are satisfied with repairs.
“Crude builds are normal at a time of high seasonal refinery maintenance,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London whose forecast for oil in the first quarter was within 0.6 percent of actual price levels. “The longer the Pegasus outage lasts, the more it is likely to weigh on WTI.”
WTI for May delivery declined as much as 68 cents to $96.51 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.79 at 10:59 a.m. London time. The volume of all futures traded was 24 percent below the 100-day average. The contract settled at $97.19 yesterday, the highest since March 28.
Brent for May settlement retreated for a second day on the London-based ICE Futures Europe exchange, dropping 43 cents to $110.26 a barrel. The contract decreased 0.4 percent to $110.69 yesterday. Trading volume was 25 percent above the 100-day average. Brent, the European benchmark grade, was at a premium of $13.47 to WTI, up from $13.50 yesterday.
Fuel Supplies
Libya, holder of Africa’s biggest oil reserves, expects production to increase to 1.7 million barrels a day this year from 1.5 million a day currently, Deputy Oil Minister Omar Shakmak said today at a conference in Dubai.
U.S. crude stockpiles probably climbed to 388 million barrels last week, the highest level in more than 22 years, as production surged and refineries completed annual maintenance programs, a Bloomberg News survey showed before the report from the Energy Information Administration.
The EIA will probably say gasoline inventories dropped 1 million barrels, according to the median estimate of 12 analysts surveyed by Bloomberg. Distillate inventories are projected to fall 1.1 million barrels. The API said yesterday gasoline stockpiles fell 5 million barrels last week, while supplies of heating oil and diesel slid 1.9 million barrels.
Pegasus Pipeline
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, scheduled for release at 10:30 a.m. in Washington.
WTI declined after trading higher than its upper Bollinger Band the past three days without settling above it, according to data compiled by Bloomberg. The indicator, representing technical resistance, is around $97.43 a barrel today. Crude’s 30-day stochastic oscillators are also above 70 for the first time in six weeks, signaling further gains after last month’s rally aren’t sustainable.
Exxon’s 96,000 barrel-a-day Pegasus pipeline line was closed after a leak was discovered in Arkansas on March 29. The line runs 940 miles (1,512 kilometers) from Patoka, Illinois, to Nederland, Texas, and serves refineries around Port Arthur and Beaumont in eastern Texas.
The U.S. Pipeline and Hazardous Materials Safety Administration issued the order yesterday, citing hazards to “life, property and the environment” if the pipeline were to continue operating without corrective measures. The line leaked 3,500 to 5,000 barrels of oil.
“We are studying the order and don’t have anything further” to say, Alan Jeffers, a spokesman at Exxon’s headquarters in Irving, Texas, said yesterday in a phone interview. “Our current plan is to develop the excavation plan, get that to PHMSA and have them evaluate that.”
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
