BLBG:WTI Crude Near Two-Week Low; Europe Probes Oil Pricing
West Texas Intermediate crude fell for a fifth day in its longest run of declines since October. Antitrust regulators are questioning European oil companies about possible manipulation of prices.
Futures traded near their lowest closing level in almost two weeks in New York. Crude inventories gained 1.1 million barrels last week, the industry-funded American Petroleum Institute said yesterday. A government report today may show stockpiles climbed 450,000 barrels, according to a Bloomberg survey. Royal Dutch Shell Plc, BP Plc, Statoil ASA and Platts said they’re being investigated after the European Commission conducted raids on their offices in three countries.
“The world will remain well-supplied,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Higher prices lately have triggered a boost to capacity that will continue to outpace slack post-crisis demand growth.”
WTI for June delivery fell as much as 77 cents, or 0.8 percent, to $93.44 a barrel and was at $93.58 in electronic trading on the New York Mercantile Exchange at 9:57 a.m. London time. The volume of all contracts traded was 15 percent above 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 fell 24 cents to $102.36 a barrel on the London-based ICE Futures Europe exchange. The volume of contracts traded was more than double the 100-day average. The front-month European benchmark was at a premium of $8.79 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. Statoil said the suspected violations relate to prices on Platts, which publishes benchmarks used in the oil industry and is owned by McGraw Hill Financial Inc.
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.
Fuel Supplies
U.S. gasoline stockpiles fell 480,000 barrels last week, the 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.
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 U.S. Energy Department’s statistical arm, for its weekly survey.
OPEC’s implied spare capacity for crude output is projected to rise to a peak at 7.18 million barrels a day in 2015 from 5.76 million this year, as U.S. production increases, the International Energy Agency said yesterday in its medium-term oil market report. The figure is calculated by subtracting anticipated demand for crude pumped by the Organization of Petroleum Exporting Countries from the group’s total production capacity.
U.S. Shale
The U.S. produced 7.37 million barrels a day in the week to May 3, the most in 21 years, EIA data show. The gains were driven by increased output from shale deposits, which may propel the U.S. to displace Saudi Arabia as the world’s top producer by 2020, according to the Paris-based IEA.
“Inventories are high,” said Jonathan Barratt, 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.
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 Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
