(For Bloomberg fair value curves, see CFVL <GO>)
March 20 (Bloomberg) -- West Texas Intermediate rose after its steepest plunge in a month, while Brent futures rebounded from their lowest level since December, as policy makers weighed bailout options for Cyprus.
Both WTI and Brent climbed as much as 1.1 percent, causing the spread between the two benchmark crudes to halt a three-day contraction. Luxembourg’s Luc Frieden called for his fellow euro-area finance ministers to reconvene “as soon as possible” to assemble a new rescue package for Cyprus after the island nation rejected a levy on bank deposits. U.S. crude stockpiles declined by 413,000 barrels last week, the American Petroleum Institute said yesterday. Government data on supply will be released today.
“The market appears more than able to stomach all the bad news,” said Carsten Fritsch, an analyst in Frankfurt at Commerzbank AG, which predicts WTI will rise to an average $96 a barrel in the second quarter. “While just a year ago events in Cyprus may have sparked massive turmoil in financial markets, markets appear to be increasingly immune.”
WTI futures for April delivery, which expire today, advanced as much as 97 cents to $93.13 a barrel in electronic trading on the New York Mercantile Exchange and were at $92.95 at 12:40 p.m. London time. The more-actively traded May contract was up 80 cents at $93.32. The volume of all futures was 21 percent below the 100-day average, according to data compiled by Bloomberg. The front-month contract lost $1.58, or 1.7 percent yesterday, the most since Feb. 20.
Brent for May settlement on the London-based ICE Futures Europe exchange climbed as much as $1.15 to $108.60 a barrel. The volume of all futures was down 25 percent from the 100-day average. Prices slid $2.06 yesterday to $107.45, the lowest close since Dec. 10.
The European benchmark grade was at a premium of $15.07 to WTI for the same month, after falling to $14.93 yesterday, the narrowest closing spread since July 24.
Brent, the benchmark grade for more than half the world’s oil, rebounded as a technical indicator showed yesterday’s drop was unsustainable, data compiled by Bloomberg show. The 14-day relative strength index fell below 30, a level that signals futures are oversold. The reading was 34.1 today.
WTI has chart resistance along its middle Bollinger Band, around $93.60 a barrel, Bloomberg data show. Futures yesterday traded near this indicator for a third day without settling above it, signaling a level where sell orders may be clustered.
The European Central Bank’s Governing Council, which was due to meet today in Frankfurt, must decide whether to give Cyprus more time or consider cutting off funds to its lenders.
The Cypriot parliament rejected an unprecedented tax on bank deposits aimed at raising 5.8 billion euros ($7.5 billion) in return for 10 billion euros in external aid. The European Union accounted for 16 percent of the world’s oil demand in 2011, according to BP Plc’s Statistical Review of World Energy.
Crude stockpiles at Cushing, Oklahoma, the largest U.S. oil-storage hub and the delivery point for New York-traded futures, shrank by 289,000 barrels last week to 49 million, the lowest level this year, the API data showed yesterday.
An Energy Department report today may show U.S. crude supplies increased by 2 million barrels last week to 386 million barrels, the highest level since July, according to the median estimate of 11 analysts surveyed by Bloomberg News.
U.S. gasoline inventories gained 278,000 barrels last week, the API data showed. They are forecast to decrease by 2 million barrels in the government report. Distillate stockpiles, including heating oil and diesel, dropped 1.3 million barrels, compared with a projected 1 million barrel decline in the survey.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Information Administration, the Energy Department’s statistics unit, for its weekly survey.
--With assistance from Yee Kai Pin and Ramsey Al-Rikabi in Singapore. Editors: Bruce Stanley, Anthony DiPaola