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By Ben Sharples
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West Texas Intermediate crude fell a second day, trimming a third weekly gain, as rising supplies countered signs of economic growth. Brent’s premium to WTI may narrow to $5, according to Goldman Sachs Group Inc.
Futures slid as much as 0.5 percent in New York. U.S. claims for jobless benefits last week dropped to the lowest since January 2008, the Labor Department said yesterday. The dollar gained against the euro for the first time in three days, limiting the appeal of investing in commodities priced in the American currency. U.S. rude stockpiles rose to the most since 1931, a government report showed May 8. The spread between WTI and Brent will narrow in the third quarter, Goldman said in an e-mailed report.
“We have better economic figures on the one hand but a stronger U.S. dollar on the other and the net result is a soft tone,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “We’ve moved from $86 to $96, which is more than 10 percent, in the course of the last few weeks so that tips the risks to the downside.”
WTI for June delivery dropped as much as 47 cents to $95.92 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.16 at 2:18 p.m. Sydney time. The volume of all contracts traded was 29 percent below the 100-day average. Prices declined 23 cents to $96.39 yesterday and are up 0.5 percent this week.
Brent for June settlement slipped 24 cents to $104.23 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark was at a premium of $8.08 to WTI futures, unchanged from yesterday. It closed at $7.72 on May 8, the narrowest gap since January 2011.
Cushing Bottleneck
A bottleneck at Cushing, Oklahoma, the delivery point for WTI, will ease as pipeline capacity expands, including the Ho-Ho line connecting the Houston crude market with refineries on the U.S. Guld Coast, Goldman said. Brent’s premium to WTI may rebound as early as 2014 as the U.S. Gulf Coast becomes saturated with light, sweet crude, the bank said in the report.
Stockpiles at Cushing, the largest U.S. oil-storage hub, dropped a second week in the seven days ended May 7 to 49.1 million barrels, according to the May 8 report from the Energy Information Administration.
Total U.S. crude stockpiles rose by 230,000 barrels to 395.5 million last week, the most since weekly data started in 1982, the EIA said. According to monthly data, they were last at this level in 1931. Output rose 57,000 barrels a day to 7.37 million last week, the highest level since February 1992.
Iraq Exports
WTI may decline next week as U.S. supplies climb amid concern the global economy will slow, a Bloomberg survey shows. Fifteen of 33 analysts and traders, or 45 percent, forecast crude will fall through May 17. Thirteen respondents, or 39 percent, predicted an increase, and five projected no change.
Iraq restored crude exports yesterday to Turkey after repairing a pipeline in the northern city of Mosul. The pipeline from the nation’s northern oil hub of Kirkuk to Turkey’s port of Ceyhan on the eastern Mediterranean Sea has an average flow of 335,000 barrels a day, state-run North Oil said in a statement. The link was damaged May 8 by an explosive charge.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
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