BLBG:WTI Halts Three-Day Gain as IEA Cuts Oil Demand Forecast
West Texas Intermediate halted a three-day advance as the International Energy Agency lowered its forecast for oil demand and a report showed that crude inventories climbed to a 22-year high in the U.S.
Futures slipped 0.1 percent in New York after earlier falling as much as 0.5 percent. The IEA downgraded its estimate for global consumption for a third month and predicted the weakest demand in Europe since the 1980s. U.S. crude reserves increased by 250,000 barrels last week to 389 million, the most since July 1990, a government report showed yesterday.
“Demand remains subdued and supplies are adequate,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicted that WTI will struggle to climb above $98 a barrel this month.
WTI for May delivery dropped as much as 51 cents to $94.13 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.55 at 12:06 p.m. London time. The volume of all futures traded was 31 percent lower than the 100-day average. The contract rose 44 cents to $94.64 yesterday, its highest close since April 2.
Brent for May settlement dropped 4 cents, or less than 0.1 percent, to $105.75 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade has a premium of $11.20 to WTI futures. The spread was $11.15 yesterday, its narrowest closing level since June 21.
Declining Demand
Global demand for oil will average 90.58 million barrels a day this year, according to the IEA’s April report on the market. That’s 45,000 barrels a day fewer than its projection in March’s report. European consumption will slump by 340,000 barrels a day, the Paris-based energy adviser to developed nations said today.
A U.S. Energy Department report yesterday showed that crude stockpiles climbed less than the 1.5 million barrels that analysts had predicted, according to a Bloomberg survey. Domestic production rose by 30,000 barrels to 7.18 million barrels a day, the fastest rate since July 1992, according to the Energy Information Administration, the Energy Department’s statistical unit.
Gasoline inventories advanced 1.7 million barrels, the EIA said. The median estimate of 11 analysts had called for stockpiles to drop 1.5 million barrels. Distillate supplies, including heating oil and diesel, decreased 169,000 barrels, compared with a predicted 1.5 million-barrel decline.
Refineries operated at 86.8 percent of capacity, up 0.5 percentage point from the seven days ended March 29. Processing units are typically restarted in the spring after maintenance in late winter. Refiners use the gap between peak demand for winter fuels and the increased use of gasoline during summer.
Oil in New York has technical support along its middle Bollinger Band, about $93.42 a barrel today, according to data compiled by Bloomberg. Futures halted an intraday drop near this level yesterday, before settling above it for a third day. Buy orders tend to be clustered close to chart-support levels.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
