WTI Crude Advances for a Second Day, Paring Third Weekly Decline

By Ben Sharples

West Texas Intermediate crude rose for a second day, extending a rebound from a technical support level. Futures are heading for a third weekly drop, the longest run of declines since November.

WTI climbed as much as 0.8 percent in New York. Prices rose the most in three weeks yesterday after the 14-day relative strength index sank below 30 on April 17, a signal that the market is oversold, data compiled by Bloomberg show. U.S. gasoline use in March fell to the lowest level for the month in 13 years, the American Petroleum Institute said. WTI may drop next week on signs that economic growth is slowing, according to a Bloomberg News survey.

Crude’s advance “looks like a correction” based on technical support, said David Lennox, an analyst at Fat Prophets in Sydney. “The U.S. is still weak. We can’t see any change in U.S. demand until we see a significant move in the economy.”

WTI for May delivery gained as much as 69 cents to $88.42 a barrel in electronic trading on theNew York Mercantile Exchange and was at $87.94 at 1:54 p.m. Sydney time. The volume of all futures traded was 12 percent below the 100-day average. The contract rose $1.05, or 1.2 percent, to $87.73 yesterday, the biggest gain since March 26. Prices are down 3.7 percent this week and 14 percent lower than a year ago.

Brent for June settlement increased 24 cents to $99.37 a barrel on the London-based ICE Futures Europe exchange. The contract rose $1.44, or 1.5 percent, to $99.13 yesterday. The front-month European benchmark grade was at a premium of $11.16 to WTI futures. It closed at $10.72 on April 17, the narrowest gap since Jan. 25, 2012.

Fuel Demand

Brent may fall below $95 a barrel in the “near term” if the global recovery stalls, and may slide into a lower trading range of $90 to $100 if world economic growth weakens to 3 percent from 4 percent, Francisco Blanch, the New York-based head of commodities research at Bank of America, said in an e- mailed report yesterday.

U.S. gasoline deliveries, a measure of demand, dropped 2.3 percent in March from a year ago to 8.43 million barrels a day, the industry-funded API said yesterday. Total petroleum consumption rose 0.6 percent, driven by a jump in heating oil.

Thirteen of 27 analysts and traders in the Bloomberg survey forecast WTI crude will decrease through April 26. Eight respondents, or 30 percent, predicted a gain. Six said there would be little change.

The International Monetary Fund lowered its global economic growth forecasts for 2013 on April 16. The projection for the U.S., the world’s biggest oil consumer, was cut to 1.9 percent from 2 percent. China, the second-largest crude user, was reduced to 8 percent from 8.2 percent.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

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