Brent Falls From One-Week High; U.S. Fuel Supplies Seen Rising

Dec 17, 2013 8:20 am ET

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Dec. 17 (Bloomberg) -- Brent crude declined from its highest closing level in a week. U.S. distillate and gasoline inventories probably increased last week, according to a Bloomberg survey before data tomorrow.

Futures dropped as much as 0.8 percent in London. U.S. distillate stockpiles, including heating oil and diesel, rose by 240,000 barrels last week in the seven days ended Dec. 13, according to the median estimate of eight analysts surveyed by Bloomberg before data from the Energy Information Administration. Gasoline supplies rose by 1.75 million barrels, adding to three weeks of gains, the survey showed.

“From the fundamental side the outlook is bearish, mostly due to the production increase in the U.S.,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich. “The economic picture is brightening, but it’s not yet sunny.”

Brent for February settlement slid as much as 89 cents to $108.52 a barrel on the London-based ICE Futures Europe exchange. The January contract expired at $110.47 yesterday, $1.64 higher on the day. The volume of all Brent futures traded was about 29 percent below the 100-day average.

The European benchmark crude was at a premium of $11.24 to the equivalent month contract for West Texas Intermediate as of 1:17 p.m. London time. The spread was $13.12 yesterday, the widest based on closing prices since Dec. 6.

WTI for January delivery, which will expire on Dec. 19, declined as much as 47 cents to $97.01 a barrel on the New York Mercantile Exchange, and was at $97.22 as of 1:15 p.m. London time. The contract climbed 88 cents yesterday.

U.S. Supplies

WTI lost 1.1 percent last week as U.S. fuel inventories swelled amid falling demand. A measure of gasoline consumption slid to the lowest level since May in the seven days through Dec. 6., according to the EIA, the Energy Department’s statistical arm.

U.S. crude inventories probably dropped by 3.25 million barrels, a third weekly decline, in the week to Dec. 13, according to Bloomberg’s survey before the EIA report, due to be published at 10:30 a.m. Washington time tomorrow.

The industry-funded American Petroleum Institute, also based in Washington, is scheduled to release separate stockpile data later today. The API collects information on a voluntary basis from operators of refineries, terminals and pipelines. The government requires that data be filed with the EIA.

“Inventory figures will be important against a background of significant stockpile build-up,” said Ric Spooner, a chief analyst at CMC Markets in Sydney. “The market will want to see some inroads into that.”

The Federal Reserve begins a two-day meeting today, where economists see an increased chance that the U.S. central bank will make its first reduction to the $85 billion monthly bond buying program that has fueled global asset gains.

--With assistance from Winnie Zhu in Singapore and Ben Sharples in Melbourne. Editors: Raj Rajendran, Stephen Voss