WTI Crude Trades Near One-Week Low as U.S. Supplies Seen Rising

By Ben Sharples

West Texas Intermediate crude traded near the lowest level in more than a week before government data that may show U.S. stockpiles climbed to the highest since at least 1931. Brent oil’s premium to WTI narrowed.

Futures fluctuated in New York, after declining a third day yesterday, on speculation rising supplies will counter signs of an economic recovery. Crude inventories probably increased a fourth week in the seven days ended May 10, rising 450,000 barrels to 396 million, according to a Bloomberg News survey before Energy Information Administration data tomorrow. Sales at U.S. retailers unexpectedly advanced in April, a Commerce Department report showed yesterday.

“We are in a situation where demand growth remains lackluster and it’s very well covered by supply,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The retail sales figures were enough to help maintain the general outlook of moderate growth rates in the U.S.”

WTI for June delivery was at $95.41 a barrel, up 24 cents, in electronic trading on the New York Mercantile Exchange at 1 p.m. Singapore time. The volume of all contracts traded was 39 percent below the 100-day average. Prices fell 87 cents to $95.17 yesterday, the lowest close since May 2.

Brent for June settlement on the London-based ICE Futures Europe exchange gained 3 cents to $102.85 a barrel. The European benchmark grade was at a premium of $7.44 to WTI futures. The spread was $7.65 yesterday, the narrowest based on closing prices since January 2011.

Cushing Supplies

The Brent-WTI spread has shrunk as inventories decreased at Cushing, Oklahoma, easing a supply glut at the delivery point for New York crude contracts. Stockpiles at the storage hub have fallen for two weeks to 49.1 million barrels, the lowest since mid-March, according to the EIA, the Energy Department’s statistical unit.

“New pipeline capacity out of Cushing into the Gulf is significantly reducing the price differential between WTI and Brent,” said Diego Parrilla, the chief investment officer of Nareco Advisors Pte, a commodity asset manager in Singapore. “The risks for WTI seem skewed to the downside in the medium term. Domestic production from shale continues to increase.”

U.S. gasoline stockpiles probably shrank by 1.1 million barrels last week, according to the median estimate of 10 analysts surveyed by Bloomberg. Distillate-fuel inventories, including heating oil and diesel, climbed by 425,000 barrels, the survey shows.

Elliot Wave

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 for its weekly survey.

Brent may drop below its April low of $96.75 a barrel as it completes a technical formation known as an Elliot Wave correction, according to Spooner at CMC Markets. The benchmark crude for half of the world’s oil has a “potentially bearish setup” and investors may sell contracts when prices are near the 50-day moving average of about $105.60, he said.

U.S. retail sales rose 0.1 percent last month, compared with a revised 0.5 percent decrease in March, the Commerce Department report showed yesterday. The median forecast in a Bloomberg survey called for a 0.3 percent drop.

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

source

please give me comments thanks