BLBG:WTI Crude Near Two-Week Low; Europe Probes Oil Pricing
West Texas Intermediate crude fell for a fifth day amid signs of rising supplies and a weakening European economy. Oil companies are being questioned by antitrust regulators about potential manipulation of prices.
Futures slid as much as 0.5 percent in New York after dropping 1 percent yesterday. U.S. crude inventories gained 1.1 million barrels last week, the American Petroleum Institute said. A government report today may show stockpiles climbed 450,000 barrels, according to a Bloomberg survey. The German economy expanded less than forecast in the first quarter and France slipped into recession. Royal Dutch Shell Plc, BP Plc, Statoil ASA and Platts said they’re being investigated after the European Commission conducted raids in three countries.
“Inventories are high,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “Given that there are no geopolitical issues at the moment, oil should drop,” he said, predicting that West Texas has buying support at $92.50 a barrel.
WTI for June delivery fell as much as 51 cents to $93.70 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.77 at 3:49 p.m. Singapore time. The volume of all contracts traded was 2 percent below the 100-day average. Prices decreased 96 cents to $94.21 yesterday, the biggest decline since May 1 and the lowest close since May 2.
Brent for June settlement declined 22 cents to $102.38 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark was at a premium of $8.61 to WTI, from $8.39 yesterday. It closed at $7.65 on May 13, the narrowest gap since January 2011.
Price Investigation
The European Commission has concerns that companies “may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products,” it said in a statement yesterday.
Shell is “fully cooperating” with the investigation into trading activities, the company said in a statement. The suspected violations relate to prices on Platts, Statoil said. Platts, owned by McGraw Hill Financial Inc., publishes benchmarks used by the oil industry.
Price assessments could be vulnerable to manipulation because traders participate voluntarily, meaning they may selectively submit only trades that benefit their positions, the International Organization of Security Commissions said in an October report.
European Economy
German gross domestic product rose 0.1 percent from the fourth quarter, when it fell a downwardly revised 0.7 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a 0.3 percent gain, according to the median of 41 estimates in a Bloomberg News survey. The French economy contracted 0.2 percent in the three months through March after shrinking the same amount in the final quarter of last year, the national statistics office said in Paris.
The European Union accounted for 16 percent of the world’s crude consumption in 2011, according to BP Plc’s Statistical Review of World Energy.
U.S. gasoline stockpiles fell 480,000 barrels last week, the industry-funded API said. An Energy Information Administration report today may show they declined 1.1 million barrels, according to the median estimate of 12 analysts in the Bloomberg survey. Distillate inventories, a category that includes heating oil and diesel, rose 1.9 million barrels, compared with a projected gain of 475,000 barrels in the survey.
Spare Capacity
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 EIA, the Energy Department’s statistical arm, for its weekly survey.
The Organization of Petroleum Exporting Countries’ implied spare crude output capacity is projected to rise to a peak at 7.18 million barrels a day in 2015 versus 5.76 million this year as U.S. production increases, the International Energy Agency said in its medium-term oil market report yesterday. The figure is calculated by subtracting the anticipated demand for OPEC crude from the group’s total production capacity.
The U.S. pumped 7.37 million barrels a day in the week to May 3, the most in 21 years, EIA data show. The gains are driven by a boost in output from shale deposits, which may propel the U.S. to become the world’s top producer by 2020, displacing Saudi Arabia, according to the Paris-based IEA.
Oil in New York has technical support along its 100-day moving average, about $93.64 a barrel today, according to data compiled by Bloomberg. Futures halted intraday declines near this indicator in two of the past three days, signaling it is where buy orders may be clustered.
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
