WTI Crude Drops as U.S. Oil Stockpiles Gain

By Ben Sharples 

West Texas Intermediate fell for the second time in three days after an industry report showed U.S. crude stockpiles increased the most in four weeks and a government order prevented the restart of a pipeline to the Texas Gulf Coast.

Futures slid as much as 0.7 percent in New York after gaining 0.1 percent yesterday. Crude inventories rose 4.7 million barrels last week, the most since the seven days ended March 1, according to data from the American Petroleum Institute. A government report today may show supplies climbed 2.1 million barrels. Exxon Mobil Corp.’s Pegasus pipeline that runs from the U.S. Midwest to Texas refineries will remain shut until regulators are satisfied with repairs.

“We’ll keep an eye on the inventory data and see what happens” with the Energy Department report, said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney, who predicts West Texas has support at $94.50 a barrel. “The market is in a range.”

WTI for May delivery declined as much as 64 cents to $96.55 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.70 at 12 p.m. Singapore time. The volume of all futures traded was 11 percent below the 100-day average. The contract settled at $97.19 yesterday, the highest since March 28. Futures have traded between $90 and $98 since the start of 2013.

Brent for May settlement was down for a second day on the London-based ICE Futures Europe exchange, dropping 42 cents to $110.27 a barrel. The contract decreased 0.4 percent to $110.69 yesterday. Trading volume was 7.6 percent above the 100-day average. The European benchmark grade was at a premium of $13.63 to WTI futures, from $13.50 yesterday.

Fuel Supplies

U.S. crude stockpiles probably climbed to 388 million barrels last week, the highest level in more than 22 years, as production surged and refineries completed annual maintenance programs, a Bloomberg News survey showed before the report from the Energy Information Administration.

Gasoline inventories fell 5 million barrels last week, the API data show. They are forecast to drop 1 million barrels, according to the median estimate of 12 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, slid 1.9 million barrels, compared with a projected fall of 1.1 million barrels in the survey.

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, the Energy Department’s statistics unit, for its weekly survey.

Pegasus Pipeline

Oil is declining in New York after trading higher than its upper Bollinger Band the past three days without settling above it, according to data compiled by Bloomberg. This indicator, representing technical resistance, is around $97.43 a barrel today. Crude’s 30-day stochastic oscillators are also above 70 for the first time in six weeks, signaling further gains after last month’s rally aren’t sustainable.

Exxon’s 96,000 barrel-a-day Pegasus pipeline line was closed after a leak was discovered inArkansas on March 29. The line runs 940 miles (1,512 kilometers) from Patoka, Illinois, to Nederland, Texas, and serves refineries around Port Arthur and Beaumont in eastern Texas.

The U.S. Pipeline and Hazardous Materials Safety Administration issued the order yesterday, citing hazards to “life, property and the environment” if the pipeline were to continue operating without corrective measures. The line leaked 3,500 to 5,000 barrels of oil.

“We are studying the order and don’t have anything further” to say, Alan Jeffers, a spokesman at Exxon headquarters in Irving, Texas, said yesterday in an phone interview. “Our current plan is to develop the excavation plan, get that to PHMSA and have them evaluate that.”

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

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