BLBG:WTI Crude Drops First Day in Four as U.S. Stockpiles Seen Rising
West Texas Intermediate crude dropped for the first time in four days before government data that may show U.S. stockpiles rose from an 82-year high.
Futures slipped as much as 0.6 percent in New York after the biggest three-day gain since August. U.S. crude supplies probably increased by 2 million barrels last week to 397.3 million, according to a Bloomberg News survey before a report from the Energy Information Administration. Saudi Arabia raised output to 9.32 million barrels a day in April, the highest in five months, a person with knowledge of the country’s production said. A separate survey showed trade with China, the world’s second-biggest crude consumer, probably slowed last month.
“Given the supply position, I think the market might struggle” to rise above yesterday’s levels, said Ric Spooner, a chief market analyst at CMC Markets in Sydney who predicts WTI may see selling pressure at about $98 to $100.50 a barrel. “There’s been a significant rally and I think we might see a bit of caution or profit taking prior to the Chinese numbers.”
WTI for June delivery fell as much as 60 cents to $95.56 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.68 at 1:26 p.m. Sydney time. The volume of all contracts traded was 8 percent below the 100-day average. Futures gained 55 cents to $96.16 yesterday, the highest close since April 2, and rose 5.6 percent in the past three days.
Brent for June settlement dropped 36 cents to $105.10 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark was at a premium of $9.42 to WTI futures, from $9.30 yesterday. It closed at $8.58 on May 3, the narrowest gap since December 2011.
Brent-WTI Outlook
Brent’s premium to WTI may widen to as much as $15 a barrel in the third quarter, Societe Generale SA said in an e-mailed note today. Purchases of Atlantic Basin low-sulfur, or sweet, crude are increasing with a seasonal rebound in refinery utilization rates, the bank said. That may lift front-month Brent prices, while the outlook for WTI is “neutral to bearish” because of the rising U.S. supplies, according to the report.
U.S. crude stockpiles probably gained last week as domestic output remained near the most in two decades and demand fell, according to the Bloomberg survey of nine analysts. Gasoline inventories fell by 400,000 barrels and distillate supplies, a category that includes heating oil and diesel, increased by 500,000 barrels, the survey shows.
Pipeline Shutdown
The American Petroleum Institute is scheduled to release separate supply data today. The industry-funded 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 statistical arm, for its weekly survey.
Enbridge Inc. (ENB)’s planned shutdown of the Ozark pipeline for 10 days starting June 10 will reduce capacity to move oil from Cushing, Oklahoma, the delivery point for Nymex futures. Enbridge will shut the line, which has the capacity to carry 215,000 barrels of crude a day to Wood River, Illinois, from Cushing, for planned maintenance, said Larry Springer, a Houston-based spokesman for the company. Monthly throughput will be reduced by 40 percent, he said.
Saudi Supply
Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, increased output by 180,000 barrels a day last month, according to the person who asked not to be identified because the information is confidential. The nation supplied 9.16 million barrels a day to international and domestic markets, compared with 9.15 million in March, the person said.
China’s goods exports probably rose 9.1 percent in April from a year earlier, compared with 10 percent in March, according to a Bloomberg survey of economists before data from the customs administration tomorrow. Imports probably increased 13 percent, compared with 14.1 percent the prior month, the survey showed. China accounted for 11 percent of the world’s oil consumption in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.
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
