WTI Oil Trades Near Four-Month Low; OPEC Says No Emergency Talks

By Ben Sharples

West Texas Intermediate crude fluctuated near the lowest level in four months as U.S. fuel demand shrank and production climbed to a two-decade high. OPEC said it doesn’t plan to hold an emergency meeting on prices.

Futures were little changed after dropping as much as 1.2 percent in New York. U.S. gasoline and distillates demand declined last week while daily crude output rose to 7.2 million barrels, the highest since July 1992, Energy Information Administration data showed. The Organization of Petroleum Exporting Countries has no plans to hold talks in response to oil’s drop after Brent slid below $100 a barrel, according to two delegates with knowledge of the group’s policy.

“The market is coming back to reality that revisions in growth and gross domestic product have to translate into weaker demand,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “There are more hard times to come.”

WTI for May delivery was at $86.62 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchange at 3:03 p.m. Singapore time after earlier falling as much as $1.07 to $85.61. It slid 2.3 percent to $86.68 yesterday, the lowest closing price since Dec. 13. The volume of all futures traded was more than double the 100-day average.

Brent for June settlement on the London-based ICE Futures Europe exchange was at $97.59 a barrel, down 10 cents. The volume of all futures traded was almost three times the 100-day average. The front-month European benchmark grade was at a premium of $10.74 to WTI for the same month. The spread closed at $10.72 yesterday, the narrowest since Jan. 25, 2012.

Relative Strength

WTI’s decline is slowing as a technical indicator shows futures have fallen too quickly for further losses to be sustainable, according to data compiled by Bloomberg. The 14-day relative strength index sank below 30 yesterday, signaling the market is oversold. Today’s reading is around 28. Crude rebounded from under $90 a barrel in March 4, the last time the RSI was below 30.

OPEC members should debate whether to hold an emergency meeting if oil prices stay below $100 a barrel, Rostam Qasemi, Iran’s oil minister, said in Tehran yesterday, according to state-run Press TV. There are no plans for special talks, the two OPEC delegates said, asking not to be identified because such discussions are private. An official at OPEC’s Vienna headquarters declined to comment when contacted by phone today. The group’s next scheduled meeting is on May 31.

Fuel Use

U.S. daily gasoline consumption fell for a second week to 8.38 million barrels a day, according to the EIA, the Energy Department’s statistical unit. Demand for distillate fuels, including diesel and heating oil, tumbled 5.9 percent to 3.63 million barrels a day in the week ended April 12.

Crude stockpiles decreased by 1.2 million barrels, the first drop in four weeks. Inventories were projected to increase 1.2 million barrels, according to the median estimate of 11 analysts in a Bloomberg News survey.

Gasoline supplies slid 633,000 barrels last week, the EIA report showed. They were forecast to drop 800,000 barrels, according to the survey. Distillate inventories, a category that includes heating oil and diesel, rose 2.4 million barrels, compared with a 350,000 barrel decline forecast in the survey.

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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