WTI Trades Near Week’s Low as Oil Supplies Rise to 22-Year High

By Ben Sharples

West Texas Intermediate crude fluctuated after its biggest loss since November as stockpiles climbed to the highest level in 22 years in the U.S., the world’s biggest oil consumer.

Futures were little changed in New York after dropping 2.8 percent yesterday, the most since November. U.S. crude supplies rose by 2.7 million barrels to 388.6 million last week, the highest since 1990, the Energy Information Administration said in a report. They were projected to gain 2.1 million barrels, according to a Bloomberg News survey. Barclays Plc, the most bullish of 44 oil-price forecasters this year, cut its predictions for Brent and WTI, citing fewer supply threats.

“The inventory data could well have been the trigger that got people thinking, but I don’t think it was the only cause,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “Although there is quite clearly a recovery coming through in the U.S. and stable growth in China, the oil market appeared to run well ahead of that. Modest numbers have people starting to wonder about the speed and size of the rise.”

WTI for May delivery was at $94.52 a barrel in electronic trading on the New York Mercantile Exchange, up 7 cents, at 2:41 p.m. Singapore time. The volume of all futures traded was 44 percent above the 100-day average. The contract dropped $2.74 to $94.45 yesterday, the most since Nov. 20 and the lowest price since March 22. Prices are up 2.9 percent this year.

Technical Support

Brent for May settlement on the London-based ICE Futures Europe exchange was at $107.58 a barrel, up 44 cents. It fell 3.2 percent to $107.11 yesterday, the lowest price since Dec. 7. The volume of all futures traded was 24 percent higher than the 100-day average. The European benchmark grade was at a premium of $13.02 to WTI futures, from $12.66 yesterday.

Brent is rebounding after reaching technical support yesterday along the so-called neckline of a “head and shoulders” chart pattern, according to data compiled by Bloomberg. Futures halted declines in January and March along this line, which is around $106.70 a barrel today. Buy orders tend to be clustered near chart-support levels, while losses may accelerate with a breach of support.

Brent will average $112 a barrel this year, Barclays said yesterday in an e-mailed report. Its estimate was reduced from $125, which had been the highest of all analyst forecasts compiled by Bloomberg. WTI will average $95 this year, compared with a previous prediction of $108, according to the bank.

Cushing Stockpiles

Crude inventories at Cushing, Oklahoma, decreased by 287,000 barrels to 49.2 million last week, according to the EIA, the statistics unit of the Energy Department. Supplies at the storage hub, the delivery point for WTI futures, rose to a record 51.9 million in January.

U.S. gasoline stockpiles fell 572,000 barrels to 220.7 million last week, the lowest since December, according to the EIA. Supplies of distillate fuel, including diesel and heating oil, slid 2.3 million barrels to 113 million, the data show.

Refineries operated at 86.3 percent of capacity last week, the highest rate in two months, the EIA reported. Processing units are traditionally restarted in the spring after being idled for maintenance in late winter as production shifts away from heating oil and before the peak season for gasoline consumption.

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

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