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Oct. 29 (Bloomberg) -- West Texas Intermediate crude fell for the first time in four days on estimates that U.S. inventories reached a four-month high.
Futures dropped 0.5 percent. Stockpiles climbed for the sixth consecutive time in the week ended Oct. 25, according to a Bloomberg survey before a report from the Energy Information Administration tomorrow. Total petroleum demand is at the lowest seasonal level in 15 years, according to data from the EIA, the Energy Department’s statistics unit.
“The idea that we will have a sixth straight week of inventory build in the U.S. is weighing on the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “As long as we continue to see weakening fundamentals, the market will have a tough time to pick its head up.”
WTI for December delivery slid 48 cents to $98.20 a barrel on the New York Mercantile Exchange. The volume of all futures traded was about 45 percent below the 100-day average. Prices are 4 percent lower so far in October.
Prices extended losses after the American Petroleum Institute reported that U.S. inventories grew 5.88 million barrels last week. WTI slid 70 cents to $97.98 a barrel at 4:38 p.m. in electronic trading. It was $98.22 before the report was released at 4:30 p.m.
Brent for December settlement dropped 60 cents, or 0.5 percent, to close at $109.01 a barrel on the London-based ICE Futures Europe exchange. Volume was 15 percent below the 100-day average. The European benchmark crude was at a premium of $10.81 to WTI, compared with $10.93 yesterday.
Crude stockpiles climbed by 2.4 million barrels last week to 382.2 million, the Bloomberg survey showed. The total would be the most since June 28, while the advance would be the longest stretch since March.
U.S. output has jumped 13 percent this year on increasing output from shale formations, according to the EIA, the Energy Department’s statistical arm. Refineries kept their operations at a six-month low last week, reducing demand for crude, the survey also showed.
“Yet another inventory increase is expected,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “The reasons for the WTI weakness and increasing inventories include low refinery utilization due to maintenance and yet another strong increase in shale oil production.”
Total petroleum demand dropped 3.8 percent to 18.3 million barrels a day in the week ended Oct. 18, the EIA reported last week. That’s the weakest level since June 7 and the lowest level for any week in October since 1998.
“You saw a nice bounce over the last three days and today is a pullback from that,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “Demand overall isn’t that great. U.S. supply is rising at a rapid rate. WTI will eventually fall to the $90 level.”
The U.S. will account for about 21 percent of global oil demand this year, almost double the estimate for China, the second-biggest consumer, according to forecasts from the International Energy Agency.
The industry-funded API collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical unit.
Brent, the European benchmark, rallied yesterday as Libya’s crude production was cut by half amid protests. Production nationwide dropped to about 250,000 to 300,000 barrels a day as Tuareg nomads seeking greater political recognition halted flows from the Al-Sharara field, the state-run National Oil Corp. said yesterday.
Goldman Sachs Group Inc. cut its 2013 estimate for production from the Organization of Petroleum Exporting Countries, citing supply constraints in Libya. OPEC’s output will decrease by 760,000 barrels a day from last year, according to Goldman Sachs, which previously projected an annual loss of 570,000. Libya’s production will remain capped at 650,000 this year, the bank predicted.
The Federal Reserve’s policy makers meet today and tomorrow to consider when to start trimming their $85 billion of monthly bond purchases. They won’t begin to slow stimulus until March, according to a Bloomberg News survey of economists this month.
“We are getting some support from falling Libya production,” McGillian said. “The idea that the Fed will keep printing money is providing some support to the market.”
Implied volatility for at-the-money WTI options expiring in December was 19.6 percent, up from 19.4 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 319,292 contracts as of 4:38 p.m. It totaled 442,341 contracts yesterday, 23 percent lower than the three-month average. Open interest was 1.78 million contracts.
--With assistance from Grant Smith in London and Mark Shenk in New York. Editors: Richard Stubbe, David Marino