WTI Oil Trades Near Two-Day Low as U.S. Crude Stockpiles Climb

By Ben Sharples

West Texas Intermediate oil traded near the lowest level in two days after U.S. crude stockpiles rose almost five times more than forecast. The Brent pipeline system remained shut a fifth day.

WTI futures were little changed after falling for the fourth time in five days yesterday. Crude supplies increased by 3.8 million barrels last week, an Energy Information Administration report showed, compared with a projected 788,000 barrels in a Bloomberg News survey. It’s unclear when the Brent network will resume, according to an official from Abu Dhabi National Energy Co. (TAQA) PJSC, the pipeline operator known as Taqa.

“The increase in crude inventories in the U.S. feeds into the problem that demand is not really looking sufficient enough to cover supply growth at this stage,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market has a bit of a softer tone to it.”

WTI for April delivery was at $90.35 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 3:13 p.m. Singapore time. The volume of all futures traded was 36 percent below the 100-day average. The contract slid 39 cents yesterday to $90.43, the lowest close since March 4.

Brent for April settlement on the London-based ICE Futures Europe exchange was at $110.83 a barrel, down 23 cents. It dropped 55 cents yesterday to $111.06. The volume was 4.6 percent higher than the 100-day average. The European benchmark crude was at a premium of $20.47 to WTI futures from $20.63 yesterday, when it narrowed for the first time in five days.

Cushing Stockpiles

WTI has technical support along its lower Bollinger Band, about $89.70 a barrel today, according to data compiled by Bloomberg. Futures yesterday traded below the indicator before rebounding to settle higher for a second day, signaling chart support, where buy orders may be clustered.

U.S. crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the country’s biggest oil-storage hub, rose 257,000 barrels to 50.8 million, the highest level in a month, the EIA data showed. Supplies nationwide climbed to 381.4 million, the most since June.

Distillate inventories, including heating oil and diesel, fell 3.8 million barrels, according to the EIA. They were projected to fall by 1 million barrels. Gasoline supplies were down by 616,000 barrels, less than a forecast 1 million-barrel decline.

Refinery utilization decreased 2.9 percentage points from the previous week to 82.2 percent, the lowest rate since March 16, 2012. Processing was forecast to rise 0.4 percentage point in the Bloomberg survey of analysts.

North Sea Output

U.S. oil-demand weakness may be overstated because of disruptions from Hurricane Sandy in October at pipelines and terminals that have made it difficult for refiners to ship products, Stefan Wieler, a London-based analyst at Goldman Sachs Group Inc., said in a report yesterday.

The death of Venezuelan President Hugo Chavez should have a limited impact on the country’s oil production in the short term, while a change of leadership may foster longer-term investment and boost output, the bank said. Venezuela pumped 2.86 million barrels a day of crude last month, according to a Bloomberg survey of producers and analysts.

Production from the 27 North Sea oil fields that make up the Brent system was shut March 2 after Taqa reported a leak in one leg of the Cormorant Alpha platform. The pipeline normally carries 90,000 barrels a day of oil, equivalent to 10 percent of U.K. output, though 10,000 barrels a day was already offline after a similar incident at the same platform on Jan. 14.

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 atakwiatkowsk2@bloomberg.net

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