WTI Crude Drops First Day in Four as U.S. Stockpiles Seen Rising

By Ben Sharples 

West Texas Intermediate crude fell for the first time in four days before government data that may show U.S. stockpiles rose from an 82-year high. Saudi Arabia boosted output to the most in five months.

Futures slid as much as 0.9 percent in New York after the biggest three-day gain since August. U.S. crude supplies probably increased by 2 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration report tomorrow. Saudi Arabia raised output to 9.32 million barrels a day in April, a person with knowledge of the country’s production said. China’s external trade probably slowed last month, a separate survey showed.

“Given the supply position, I think the market might struggle” to rise above yesterday’s levels, said Ric Spooner, a chief market analyst at CMC Markets in Sydney who predicts WTI faces selling pressure at about $98 to $100.50 a barrel. “There’s been a significant rally and I think we might see a bit of caution or profit taking prior to the Chinese numbers.”

WTI for June delivery declined as much as 85 cents to $95.31 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.34 at 1:34 p.m. Singapore time. The volume of all contracts traded was 21 percent above the 100-day average. Futures climbed 55 cents to $96.16 yesterday, the highest close since April 2, capping a three-day gain of 5.6 percent.

Brent for June settlement on the London-based ICE Futures Europe exchange fell as much as 51 cents, or 0.5 percent, to $104.95 a barrel. The European benchmark crude was at a premium of $9.63 to WTI futures, from $9.30 yesterday. The spread closed at $8.58 on May 3, the narrowest since December 2011.

Brent-WTI Outlook

Brent’s premium to WTI may widen to as much as $15 a barrel in the third quarter, Societe Generale SA said in an e-mailed note today. Purchases of Atlantic Basin sweet, or low-sulfur, crude are increasing with a seasonal rebound in refinery utilization rates, the bank said. That may boost front-month Brent prices, while the outlook for WTI is “neutral to bearish” because of rising U.S. supplies, according to the report.

U.S. crude stockpiles probably increased to 397.3 million barrels last week as domestic output remained near the highest in two decades and demand declined, according to the Bloomberg survey of nine analysts. Gasoline inventories decreased by 400,000 barrels and distillate supplies, including heating oil and diesel, climbed by 500,000 barrels, the survey shows.

Pipeline Shutdown

The American Petroleum Institute in Washington is scheduled to release separate supply data today. The industry group 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 statistical unit, for its weekly survey.

Enbridge Inc. (ENB)’s planned shutdown of the Ozark pipeline for 10 days starting June 10 will reduce capacity to move oil from Cushing, Oklahoma, the delivery point for Nymex futures. Enbridge will shut the line, which has the capacity to carry 215,000 barrels a day of crude to Wood River, Illinois, from Cushing, for maintenance, said Larry Springer, a company spokesman in Houston. Monthly throughput will be reduced by 40 percent, he said.

Saudi Supply

Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, increased output by 180,000 barrels a day last month, according to the person who asked not to be identified because the information is confidential. The country supplied 9.16 million barrels a day to international and domestic markets, compared with 9.15 million in March, the person said.

China’s goods exports probably rose 9.1 percent in April from a year earlier, compared with 10 percent in March, according to a Bloomberg survey of economists before customs data tomorrow. Imports probably increased 13 percent, from 14.1 percent the prior month, the survey showed. China accounted for 11 percent of global oil consumption in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.

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

source

please give me comments thanks