WTI Oil Trades Near Five-Week High; U.S. Stockpiles Seen Rising

By Jacob Adelman

West Texas Intermediate oil traded near the highest level in five weeks. U.S. crude inventories probably rose as domestic output stayed near the strongest in two decades, a Bloomberg News survey showed.

Futures were little changed after advancing a second day yesterday. Crude stockpilesincreased by 1.4 million barrels to 384.1 million last week, the highest since June, according to the median of seven analyst estimates before an Energy Information Administration report tomorrow. Domestic production was 7.15 million barrels a day in the prior week, 9,000 less than the 21-year high reached in the seven days ended March 8.

“The market’s been watching the U.S. reserves quite closely, which have been climbing somewhat, as domestic production has been coming on stream and demand has remained relatively flat,” said David Lennox, an analyst at Fat Prophets in Sydney who predicts WTI will struggle to rise above $95 a barrel for the rest of this year. “Barring any supply shock events, we believe the topside will be somewhat limited.”

WTI for May delivery was at $94.85 a barrel, up 4 cents, in electronic trading on the New York Mercantile Exchange at 12:51 p.m. Singapore time. The volume of all futures traded was 54 percent below the 100-day average for the time of day. The contract rose $1.10 to $94.81 yesterday, the highest close since Feb. 19. Prices have advanced 3.3 percent this year.

Brent oil for May settlement was unchanged at $108.17 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 64 percent below the 100-day average. Prices are down 2.7 percent in 2013. The European benchmark crude’s premium to WTI was at $13.35. It closed at $13.36 yesterday, the least since July.

U.S. Fuel Supplies

U.S. gasoline stockpiles probably slid by 1 million barrels last week to 221.8 million, according to the Bloomberg survey before the report by the Energy Information Administration, the Energy Department’s statistical arm.

Gasoline consumption dropped 3.5 percent in the week ended March 15 to 8.32 million barrels a day, the least since Jan. 11, EIA data show. Regular gasoline at U.S. pumps fell to $3.68 a gallon, down from $3.696 a gallon a week ago, the agency said on its website yesterday.

Inventories of distillate fuel, a category that includes heating oil and diesel, probably fell 1 million barrels to 118.8 million, the Bloomberg survey showed. A decline of that size would leave supplies at the lowest level since December.

Crude Output

The industry-funded American Petroleum Institute is scheduled to release separate inventory data today. 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 for its weekly survey.

Crude production in Texas’s Eagle Ford shale formation climbed 50 percent in January from a year earlier, boosted by drilling from companies including ConocoPhillips (COP) andChesapeake Energy Corp. (CHK), according to preliminary data released by the Texas Railroad Commission yesterday. The nine geographic fields that make up the majority of the Eagle Ford yielded 373,303 barrels a day, the figures show.

To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net

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