BLBG:Oil Trades Near One-Week Low on U.S. Supplies, Seaway Pipeline
Oil traded near the lowest level in a week in New York after U.S. crude stockpiles gained and capacity on the Seaway pipeline was reduced.
Futures were little changed after dropping yesterday the most in a month. Crude supplies rose by 3.2 million barrels last week, the biggest increase in six weeks, the industry-funded American Petroleum Institute said. A government report today may show inventories climbed by 2.2 million barrels, according to a Bloomberg News survey. London-traded Brent’s premium to New York oil widened after Enterprise Products Partners LP (EPD) told shippers that capacity was limited on its expanded Seaway line.
“The Seaway pipeline issue may have triggered some long liquidation although the market is now back to normal,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo, who predicts New York crude may approach $100 a barrel within the next month. “WTI hit this year’s high yesterday so it’s a good time for some correction, some profit taking. Still the downside is limited.”
West Texas Intermediate crude for March delivery was at $95.55 a barrel, up 32 cents, in electronic trading on the New York Mercantile Exchange at 1:27 p.m. Singapore time. The contract dropped $1.45 yesterday, the most since Dec. 21, to the lowest price since Jan. 16. The average volume of all futures traded was 48 percent above the 100-day average.
Brent for March settlement was at $112.73 a barrel, down 7 cents, on the London-based ICE Futures Europe exchange. The number of futures traded was about double the 100-day average. The European benchmark contract was at a premium of $17.18 to WTI futures, down from $17.57 yesterday. The gap was $15.16 on Jan. 17, the narrowest in almost six months.
Seaway Pipeline
Oil may extend losses in New York after a so-called bearish engulfing pattern formed on the daily candlestick chart, signaling the end of an uptrend, according to data compiled by Bloomberg. Crude fell yesterday as its 14-day relative strength index had stayed above 70 for three days, an indication the market was overbought.
The Seaway pipeline, running from the WTI delivery point in Cushing, Oklahoma, to the concentration of refineries on U.S. Gulf Coast, was limited to 175,000 barrels a day at the Jones Creek terminal, according to Enterprise. The normal capacity is 400,000, meaning the conduit for limiting the accumulation of crude at America’s largest storage point is disrupted.
WTI declined 7.1 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing. That left it at an average discount of $17.47 a barrel to Brent last year, compared with a premium of about 7 cents in the five years through 2010. Brent, the benchmark grade for more than half the world’s crude, advanced 3.5 percent last year.
Fuel Supplies
Cushing stockpiles slipped 463,000 barrels last week, the first drop in seven weeks, according to the API. Supplies at the hub climbed to a record 51.8 million barrels last week.
U.S. gasoline supplies slid by 1.6 million barrels last week, API data show. They are forecast to rise 1.3 million barrels, according to the median estimate of 10 analysts in the Bloomberg survey before an Energy Department report today.
Distillate inventories, a category that includes heating oil and diesel, increased 1.3 million barrels, compared with a projection that supplies will be unchanged in the survey. The Energy Department data is being released a day later than usual because of the Martin Luther King Jr. Day holiday on Jan. 21.
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 Department for its weekly survey.
In China, the world’s second-biggest crude consumer, manufacturing is expanding at the fastest rate in two years, according to a private survey of companies. The preliminary reading of a Purchasing Managers’ Index was 51.9 in January, a statement from HSBC Holdings Plc and Markit Economics showed today. That compares with the 51.5 final reading for December and the 51.7 median estimate of 17 analysts surveyed by Bloomberg News.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
