Oil Trades Near One-Week Low as Crude Inventories Rise
Oil traded near the lowest level in almost a week in New York after U.S. crude stockpiles increased and the World Bank cut its economic growth forecasts.
Futures were little changed after slipping the most in almost a month yesterday. U.S. crude supplies gained a second week and inventories rose to a record at Cushing, Oklahoma, the delivery point for West Texas Intermediate, data from the industry-funded American Petroleum Institute showed. An Energy Department report today may show stockpiles climbed by 2.2 million barrels, according to a Bloomberg News survey. OPEC reduced its output to the lowest level in 14 months, a monthly report from the producer group showed.
Crude for February delivery was at $93.34 a barrel, up 6 cents, in electronic trading on the New York Mercantile Exchange at 1:39 p.m. London time. The contract declined 0.9 percent to $93.28 yesterday, the biggest drop since Dec. 21 and the lowest close since Jan. 9.
Brent for February settlement, which expires today, was 11 cents higher at $110.41 a barrel on the London-based ICE Futures Europe exchange. The more active March contract rose 14 cents to $109.77. The front-month European benchmark contract was at a premium of $17.12 to WTI. It closed at $17.02 yesterday, the narrowest spread since Sept. 19.
The North Sea Brent pipeline system remained shut after an oil leak was discovered on Jan. 14 at a platform connecting to the field, according to an official from Abu Dhabi National Energy Company PJSC, known as Taqa, which operates the network.
Total U.S. crude stockpiles rose by 46,000 barrels last week, according to the API. Supplies at Cushing increased 1.8 million barrels, a sixth weekly gain, to a record 51.8 million.
WTI dropped 7.1 percent in 2012 as the U.S. shale boom deepened the glut at Cushing, America’s largest storage hub. That left it at an average discount of $17.47 a barrel to Brent last year, compared with a premium of about 7 cents in the five years through 2010. Brent, the benchmark grade for more than half the world’s crude, climbed 3.5 percent last year.
U.S. gasoline supplies rose by 4.1 million barrels, the API said. They are projected to gain by 2.7 million in today’s Energy Department report, according to the median estimate of 11 analysts in the Bloomberg survey. Distillate inventories, a category that includes heating oil and diesel, fell 568,000 barrels, the API said. An increase of 1.5 million was forecast for the government report.
The Organization of Petroleum Exporting Countries cut output by 465,000 barrels a day in December to 30.4 million, the lowest level since October 2011, led by a reduction in Saudi Arabia, the group said today in its monthly report, citing secondary sources. That’s 800,000 barrels a day more than the average 29.6 million that the group estimates it will need to supply this year. OPEC kept its 2013 global demand forecast unchanged.
WTI may extend losses as a measure of technical momentum declines. On the daily chart, the moving average convergence- divergence indicator has fallen to the smallest premium to its signal line in a month, according to data compiled by Bloomberg. Investors typically sell contracts when the MACD drops below the signal line, known as a bearish crossover.
The Washington-based World Bank cut its projection for economic growth in the U.S., the biggest crude consumer, by 0.5 percentage point to 1.9 percent in its twice-yearly report yesterday.
The bank reduced its forecast for Japan, the world’s third- largest crude user, to 0.8 percent from 1.5 percent, predicted a second year of contraction in the euro region and lowered its estimates for emerging markets led by Brazil, India and Mexico. It cut the growth estimate for China, the second-biggest oil consumer, to 8.4 percent from 8.6 percent.
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