WTI Oil Maintains Gain as Equities Rise, Supply Meets Estimates

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Feb. 27 (Bloomberg) -- West Texas Intermediate oil in New York maintained gains as equities climbed and after the Energy Information Administration reported that U.S. crude supplies rose less than expected.

Futures rose as much as 0.5 percent as the Standard & Poor’s 500 Index extended yesterday’s gain. The EIA, the Energy Department’s statistical arm, said inventories increased 1.13 million barrels to 377.5 million. The report was projected to show a 2.5 million-barrel gain, according to the median of 10 responses in a Bloomberg survey. Crude production slipped 22,000 barrels a day to 7.1 million in the week ended Feb. 22. World powers and Iran ended two days of talks without agreement on the country’s nuclear program.

“What the market does today depends on the inventory numbers,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There’s a lot of support here.”

Crude oil for April delivery climbed 17 cents, or 0.2 percent, to $92.80 a barrel at 10:38 a.m. on the New York Mercantile Exchange. The contract traded at $92.85 before the release of the EIA report at 10:30 a.m. in Washington. The volume of all futures traded was 31 percent below the 100-day average. Prices have gained 1.1 percent this year and have declined 4.8 percent this month.

Brent for April settlement increased 4 cents to $112.75 a barrel on the London-based ICE Futures Europe exchange. The contract is down 2.4 percent this month. The volume of all futures traded was 9 percent lower than the 100-day average for this time.

The European benchmark crude was at a $19.95 premium to WTI futures, up from $20.08 yesterday.

The S&P 500 and Dow Jones Industrial Average each rose 0.6 percent.

U.S. Production

Crude supply has increased for six consecutive weeks. Output has gained in 22 of the past 25 weeks as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma.

Crude stockpiles at Cushing, Oklahoma, the delivery point for New York futures, decreased 75,000 barrels to 50.6 million barrels last week, the EIA said. Supplies at the hub rose to a record 51.9 million in the week ended Jan. 11.

Refineries operated at 85.1 percent of capacity in the seven days ended Feb. 22, up 2.2 percentage points from the prior week. Units are often idled for maintenance in February as attention shifts away from heating oil and before gasoline consumption rises.

Nuclear Talks

Iranian nuclear negotiator Saeed Jalili said negotiations with the U.S. and its partners will resume next month in Istanbul after discussions in Almaty, Kazakhstan, concluded. Americans and others made no offer to ease oil or financial sanctions on Iran, said a U.S. official, who asked not to be identified.

Iran’s Jalili called the two-day session a “turning point” and said a more realistic and logical proposal was made to Iran. He didn’t give details. Technical talks will be held in Istanbul on March 18 and political discussions with the so- called P5+1, the U.S., U.K., France, Germany, China and Russia, will resume in Almaty on April 5, Jalili told reporters.

“The result of the discussions is yet another example in a series of postponements,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “Geopolitical tensions with Iran can easily flare up and boost the risk premium embedded in the oil price.”

WTI may rebound after the formation of a technical-reversal candlestick yesterday known as an “inverted hammer,” according to data compiled by Bloomberg. Futures also traded below the lower Bollinger Band for a fourth day before settling higher, signaling chart support where buy orders may be clustered. This indicator is around $92.43 a barrel today.

--With assistance from Grant Smith in London. Editors: Margot Habiby, Richard Stubbe