BLBG:Brent Crude Rebounds From Three-Month Low; Premium to WTI Widens
Brent rebounded from the lowest level in three months, widening its premium to West Texas Intermediate crude for the first time in four days.
Brent futures rose as much as 0.7 percent after sliding 1.9 percent yesterday, the biggest decline since November. WTI climbed from a one-week low. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to assemble a new rescue package for Cyprus after the island nation rejected a levy on bank deposits. U.S. crude stockpiles declined by 413,000 barrels last week, according to the American Petroleum Institute.
“The market appears more than able to stomach all the bad news,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “While just a year ago events in Cyprus may have sparked massive turmoil in financial markets, markets appear to be increasingly immune.”
Brent for May settlement on the London-based ICE Futures Europe exchange climbed as much as 79 cents to $108.24 a barrel and was at $107.93 at 9:15 a.m. London time. The volume of all futures was down 24 percent from the 100-day average. Prices slid $2.06 yesterday to $107.45, the lowest close since Dec. 10. The European benchmark grade was at a premium of $15.03 to WTI for the same month after falling to $14.93 yesterday, the narrowest settlement since July 24.
Technical Bounce
WTI for April delivery, which expires today, gained 37 cents to $92.53 a barrel in electronic trading on the New York Mercantile Exchange. The more-actively traded May future was up 31 cents at $92.83. The volume of all futures was 32 percent below the 100-day average. The front-month contract lost $1.58 to $92.16 yesterday, the lowest since March 11.
Brent’s premium fell to the narrowest in almost eight months yesterday after Cyprus rejected a bank levy linked to a bailout, sparking concern that Europe’s debt crisis may worsen.
Europe’s benchmark crude is rebounding as a technical indicator shows yesterday’s drop was unsustainable, data compiled by Bloomberg show. The 14-day relative strength index fell below 30, a level that signals futures are oversold. The reading is 34.1 today.
WTI has chart resistance along its middle Bollinger Band, around $93.60 a barrel today, according to data compiled by Bloomberg. Futures yesterday traded near this indicator for a third day without settling above it, signaling a level where sell orders may be clustered.
The European Central Bank’s Governing Council meets today in Frankfurt. The bank must decide whether to give Cyprus more time or consider cutting off funds to the Mediterranean country’s lenders.
Bank Levy
“There’s a big question on the level of recovery, how fast it will happen or whether it’s stalling,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney.
The Cypriot parliament rejected an unprecedented tax on bank deposits aimed at raising 5.8 billion euros ($7.5 billion) in return for 10 billion euros in external aid. The European Union accounted for 16 percent of the world’s oil demand in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.
Crude stockpiles at Cushing, Oklahoma, the largest U.S. oil-storage hub and the delivery point for New York-traded futures, shrank by 289,000 barrels last week to 49 million, the lowest level this year, the API data showed.
An Energy Department report today may show total U.S. crude supplies increased by 2 million barrels last week to 386 million barrels, the highest level since July, according to the median estimate of 11 analysts surveyed by Bloomberg News.
Fuel Supplies
U.S. gasoline inventories gained 278,000 barrels last week, the API data show. They are forecast to decrease by 2 million barrels in the government report. Distillate stockpiles, including heating oil and diesel, dropped 1.3 million barrels, compared with a projected 1 million barrel decline in the survey.
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 Information Administration, the Energy Department’s statistics unit, for its weekly survey.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Raj Rajendran at rrajendran4@bloomberg.net
