BLBG:WTI Oil Drops From One-Week High as Saudi Arabia Boosts Output
West Texas Intermediate oil dropped from the highest price in more than a week as Saudi Arabia boosted output and industrial production slowed in China, the world’s second-biggest consumer of crude.
Futures slid as much as 0.4 percent after gaining 1.4 percent last week, the most in a month. Saudi Arabia’s crude production rose in February from a 20-month low, according to an official with knowledge of the country’s oil policy. China started the year with the weakest industrial output since 2009, government data showed March 9. Iran, which is under Western sanctions on its energy exports because of its nuclear program, said the prospects for resolving the dispute have improved.
“The higher Saudi production serves as a cap on oil prices and could drive down WTI,” said Gordon Kwan, the head of energy research at Mirae Asset Securities Ltd. in Hong Kong.
WTI for April delivery fell as much as 35 cents to $91.60 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.85 at 3:15 p.m. Singapore time. The contract advanced 39 cents to $91.95 on March 8, the highest close since Feb. 28. Prices have lost 0.3 percent this month.
Brent for April settlement on the London-based ICE Futures Europe exchange declined as much as 46 cents, or 0.4 percent, to $110.39 a barrel. The European benchmark was at a premium of $18.66 to WTI futures. The gap ended the session at $18.90 on March 8, the narrowest since Jan. 31. The volume of all futures traded today was 55 percent below the 100-day average for WTI, and 56 percent lower for Brent.
Cushing ‘Deficit’
Oil in New York has technical support along its 100-day moving average, according to data compiled by Bloomberg. Futures halted an intraday drop on Feb. 8 along this indicator, at $90.83 a barrel today. Buy orders tend to be clustered near chart-support levels.
WTI prices in the second and third quarters could be supported by pipeline “de-bottlenecking” in North America from April to June, according to Goldman Sachs Group Inc.
The balance at Cushing, Oklahoma, the largest oil storage hub in the U.S., could “shift into a large deficit” in the second quarter as refineries end maintenance and new pipeline capacity from the Permian basin diverts crude to the Gulf Coast, Jeffrey Currie, Goldman’s head of commodities research in New York, said in an e-mailed report today.
Saudi Output
Saudi Arabia raised crude production in February to 9.15 million barrels a day, an increase of 100,000 barrels from the previous month, the Persian Gulf official said, asking not to be identified because the information is confidential.
China’s industrial output expanded 9.9 percent in January and February, according to the government figures. That’s lower than a 10.6 percent median estimate in a Bloomberg survey. Retail sales also slowed in the period and new local-currency loans were down in February, separate data showed.
China accounted for 11 percent of the world’s oil consumption in 2011, behind only the U.S. at 21 percent, according to BP Plc (BP/)’s Statistical Review of World Energy.
Iran saw signals that “the other side is acting in good faith” in talks about its uranium enrichment program last month, Foreign Minister Ali Akbar Salehi said in Tehran yesterday.
The Islamic Republic met Feb. 26 and 27 in Almaty, Kazakhstan, with China, Germany, France, Russia, the U.K. and the U.S. No deal was announced, and the details of a proposal to Iran weren’t released. The two sides are scheduled to meet March 18 in Istanbul and from April 5 to April 6 in Almaty.
‘Mood Music’
Iran’s crude output in January was the lowest in three decades at 2.65 million barrels a day, the International Energy Agency said in its monthly oil market report Feb. 13.
“The mood music coming after the talks is a bit better than expected,” Robin Mills, the head of consulting at Dubai- based Manaar Energy Consulting and Project Management, said in a telephone interview yesterday. “That helped to improve expectations for the next round and that probably helped in taking some of the edge off of oil prices.”
Hedge funds reduced bullish oil bets to a two-month low in the week ended March 5 as surging U.S. supplies pushed prices below $90 a barrel for the first time this year. Stockpiles have climbed in eight of the past nine weeks as production from shale formations sent domestic output to the highest levels since 1992.
Bullish Bets Fall
Money managers cut net-long positions, or wagers on rising prices, by 4.4 percent to the lowest since Jan. 1, the Commodity Futures Trading Commission’s March 8 Commitments of Traders report showed. It was the third weekly drop, the longest series of declines since November. Bullish bets have fallen 24 percent from an 11-month high in mid-February.
The average regular gasoline price for U.S. consumers decreased 5.56 cents a gallon in the past two weeks to $3.7394 a gallon, according to Lundberg Survey Inc. The price has risen about 48 cents since Dec. 21 and is around 8 cents below the year-earlier level of $3.8148. The survey covers the period to March 8 and is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company.
To contact the reporter on this story: Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net
