(For Bloomberg fair value curves, see: CFVL <GO>)
Feb. 18 (Bloomberg) -- West Texas Intermediate oil fell for a second day, extending the biggest drop in two weeks. Saudi Arabia’s crude shipments slid to a 15-month low in December.
New York crude declined as much as 0.6 percent before a scheduled trading halt for the U.S. Presidents Day holiday. Saudi Arabia exported 7.06 million barrels of crude a day in December, the least since September 2011, according to the Joint Organizations Data Initiative. Saudi Arabia has ample supply and will cut exports further, Christof Ruehl, chief economist at BP Plc, said in an interview from London. Brent’s premium to WTI narrowed.
“It’s the kind of skewed situation where we have growth in the U.S. but they have enough oil, and where we do have the major demand growth, we don’t have the oil,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said in a telephone interview today. “That’s obviously putting the upside pressure on the Brent crude more than on WTI.”
Crude for March delivery fell 31 cents, or 0.3 percent, to $95.55 a barrel at 1:14 p.m. in electronic trading on the New York Mercantile Exchange. The contract dropped $1.45 to $95.86 on Feb. 15.
The volume of all contracts traded was 80 percent below the 100-day average. Floor trading in New York is closed today for the holiday. Electronic trading halted at 1:15 p.m. Eastern time and will resume at 6 p.m. All electronic transactions since the Nymex closed on Feb. 15 will be dated tomorrow.
“In such low volumes, it doesn’t take much to push WTI in electronic trading,” said Andrey Kryuchenkov, an oil market strategist with Global Commodities Research in London.
Brent for April settlement on the ICE Futures Europe exchange declined 12 cents to end the session at $117.54 a barrel with trading volume 70 percent below the 100-day average. The European benchmark crude was at a premium of $21.22 to WTI contracts, more than the $21.25 on Feb. 15. The gap had expanded to $23.18 on Feb. 8, the widest differential since Nov. 26.
Brent has gained 5.3 percent this year, while WTI has increased 3.8 percent.
“We’ve had a strong rally so far in 2013, and now we are considering if this is a pause in the upturn or if it is actually a turning point, but there is no significant macro trigger to release a correction, at least at the moment,” Filip Petersson, commodities strategist at SEB AB, a Stockholm-based bank, said today.
U.S. output at factories, mines and utilities decreased 0.1 percent after a 0.4 percent gain in December, Fed data showed Feb. 15 in Washington. The median estimate in a Bloomberg survey called for a 0.2 percent rise.
Hedge funds and other large speculators increased bullish bets on WTI, according to the Commodity Futures Trading Commission’s weekly report on Feb. 15. Net-long positions rose by 9,308 futures and options combined, or 4.4 percent, to 221,534, the highest level since the week ended March 27, the Commitments of Traders report showed.
WTI has long-term technical support along its 100-week moving average, around $94.73 a barrel, according to data compiled by Bloomberg. Futures have halted intraday declines near this indicator in the past four weeks. Buy orders tend to be clustered close to chart-support levels.
“There still seems to be plenty of crude around,” said Anthony Nunan, a senior adviser for risk management at Mitsubishi Corp. in Tokyo. “The market went up so much in the last month and a half that it was bound to come off. We have to correct downward from here. For WTI it will be tough to go to triple digits. We’ve hit a wall at $98.”
Ruehl of BP said the size of any future reduction in Saudi output will depend on the actions of other members of the Organization of Petroleum Exporting Countries.
Iraq, OPEC’s largest producer after Saudi Arabia, curtailed exports by 10 percent to 2.35 million barrels a day in December, data posted on the website of the initiative known as JODI showed. Venezuela increased crude shipments by 19 percent to 1.97 million barrels a day, the most since July 2008, when it exported 2.24 million. OPEC’s 12 members supplies about 40 percent of the world’s oil.
JODI, supervised by the Riyadh-based International Energy Forum, uses statistics supplied by national governments to compile data on imports, exports and output for oil-producing and consuming nations. The data include crude and condensates and exclude natural gas liquids.
Gasoline futures extended gains in New York after settling last week at the highest price since Sept. 28. The contract for March delivery increased 2.36 cents, or 0.8 percent, to $3.1581 a gallon at 1:14 p.m., before the electronic trading halt on the Nymex.
--With assistance from Grant Smith in London, Yee Kai Pin and Winnie Zhu in Singapore and Edward Welsch in Calgary. Editors: Margot Habiby, Raj Rajendran