BLBG:WTI Crude Trades Near Four-Week Low as Supplies Increase
West Texas Intermediate crude traded near a four-week low after an industry report showed U.S. stockpiles rose the most in a month. The oil market is balanced, Saudi Arabia said before OPEC meets tomorrow.
Futures dropped as much as 0.8 percent in New York after falling 2 percent yesterday. U.S. crude inventories climbed 4.4 million barrels in the seven days to May 24 for a fifth weekly gain, the American Petroleum Institute said. Government data today may show supplies shrank, according to a Bloomberg News survey. Current prices are suitable for producers and consumers, Saudi Arabia’s Oil Minister Ali al-Naimi said. The International Monetary Fund cut its forecast for Chinese economic growth.
“The market is getting more worried about China, with the latest figures disappointing,” said Thina Saltvedt, an Oslo-based analyst at Nordea Bank AB, who believes the Organization of Petroleum Exporting Countries will maintain its current target. “With the U.S. also looking like pulling back liquidity from the market, people are worried about future growth in the world’s two largest economies.”
WTI for July delivery was at $92.46 a barrel in electronic trading on the New York Mercantile Exchange, down 71 cents, at 10:35 a.m. London time. The volume of all futures traded was 5 percent above the 100-day average. The contract fell $1.88 to $93.13 yesterday, the lowest close since May 1. Futures have lost 1.1 percent this month after a 3.9 percent drop in April.
OPEC Supply
Brent for July settlement was down 78 cents at $101.65 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $9.26 to WTI futures. The spread was $9.30 yesterday, the widest based on closing prices since May 15.
OPEC, which supplies about 40 percent of oil globally, is expected to keep its output target at 30 million barrels a day at the meeting in Vienna, two delegates said on May 28, asking not to be identified because the decision isn’t yet final. All but one of 20 analysts in a Bloomberg News survey predicted the 12-member group will maintain its target.
There’s no reason to change the target, Kuwait’s OPEC Governor Siham Razzouqi said today. Saudi Arabia’s Al-Naimi said yesterday the market is balanced and stable, according to state-run Saudi Press Agency.
Fuel Stockpiles
Oil may stay around $100 a barrel in the short term, Karim Djoudi, the Algerian finance minister, said yesterday in an interview at the African Development Bank annual meeting in Marrakech, Morocco. Algeria is boosting production capacity and will have spare output to respond to any increase in demand, he said.
U.S. crude inventories probably slid 500,000 barrels last week, according to the median estimate of 11 analysts in a Bloomberg survey before the Energy Information Administration releases data today. The report is being released a day late because of the Memorial Day holiday on May 27.
Gasoline supplies rose 1.9 million barrels, the API said yesterday. The figures from the EIA, the Energy Department’s statistical arm, are forecast to show a drop of 500,000 barrels. Distillate stockpiles, including heating oil and diesel, climbed 3.1 million barrels in the API report. They are projected to decrease by 450,000 barrels in the survey.
The IMF said yesterday that China’s economy will expand 7.75 percent this year and next, down from an April forecast of 8 percent for 2013 and 8.2 percent in 2014.
“It’s clear at the moment we have a bias to the downside, with concerns about global growth and increasing inventory numbers equaling lower prices,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney, who predicts that OPEC will cut its production limit.
WTI has technical support along its middle Bollinger Band on the weekly chart, according to data compiled by Bloomberg. This indicator, at about $92.31 a barrel today, is near where futures halted declines the past two weeks. Buy orders tend to be clustered around chart-support levels.
To contact the reporters on this story: Rupert Rowling in London at rrowling@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
