(For Bloomberg fair value curves, see: CFVL <GO>)
Feb. 7 (Bloomberg) -- Brent crude climbed to its highest level in more than four months in London, extending its premium over West Texas Intermediate for a seventh day.
Brent futures jumped 0.9 percent to the highest since Sept. 14. Saudi Arabia, the world’s largest crude exporter, produced 9.05 million barrels a day in January, close to the lowest level since May 2011, according to a Gulf official who declined to be identified. U.S. refiners supplied 1.2 percent more fuel over the past four weeks than a year earlier, the Energy Department said yesterday. Heating oil gained on forecast of a snow storm in the Northeast.
“There’s generally quite positive market sentiment and high risk appetite,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm, who estimates that oil prices have risen too high. “Prices are a bit overstretched. We have an oversupply on a global basis.”
Brent for March settlement climbed as much as $1.10 to $117.83 a barrel and was at $117.45 as of 1:21 p.m. London time on the ICE Futures Europe exchange. The number of contracts changing hands was 40 percent higher than the 100-day average. The European benchmark was at a premium of $20.65 to WTI. It settled at $20.11 yesterday, the widest since Dec. 24.
WTI for March delivery on the New York Mercantile Exchange was at $96.78 a barrel, up 16 cents in electronic trading. The volume of all contracts traded was 6.5 percent below the 100-day average.
Saudi Arabia supplied 9.26 million barrels a day to the market in January, compared with 9.151 million in December, said a Gulf official with knowledge of the kingdom’s energy policy who declined to be identified. The higher volume compared with output was made up for by deliveries from inventories.
Deep-water oil exploration has been disrupted from the Gulf of Mexico to Brazil by the discovery of faulty bolts used in safety equipment less than three years after the worst-ever U.S. maritime crude spill.
Energy explorers such as Chevron Corp., Royal Dutch Shell Plc and Transocean Ltd. said they have been directed by U.S. regulators to suspend work aboard rigs that employ General Electric Co. devices connecting drilling tubes to safety gear and the seafloor. The equipment must be retrieved so defective bolts can be replaced, the U.S. Bureau of Safety and Environmental Enforcement said in an alert issued on Jan. 29.
WTI may struggle to sustain gains as an indicator of technical momentum continues to decline against the increase in prices since the start of this week. The moving average convergence-divergence indicator is extending a discount to its signal line after a so-called bearish crossover on Feb. 4, according to data compiled by Bloomberg.
The amount of oil products supplied by U.S. refiners over the past four weeks, a proxy for demand, averaged 18.3 million barrels a day last week, the Energy Information Administration reported. Gasoline consumption for the same period was 8.4 million, 4.7 percent higher than a year ago.
Total U.S. crude stockpiles climbed 2.62 million barrels, the EIA report showed. They were forecast to gain 2.65 million barrels, according to the median estimate of eight analysts in a Bloomberg News survey. Crude stockpiles at the U.S. delivery hub in Cushing, Oklahoma, declined 315,000 barrels last week to 51.4 million, the lowest since the week ended Jan. 4.
New York City and the U.S. Northeast may get snow later this week from a storm that will develop off the East Coast, according to the National Weather Service.
Heating oil for March delivery gained as much as 0.7 percent to 320.66 cents a gallon on Nymex.
--With assistance from Yee Kai Pin and Ann Koh in Singapore and Ben Sharples in Melbourne. Editors: Raj Rajendran, Rachel Graham.