(For Bloomberg fair value curves, see CFVL <GO>.)
Feb. 21 (Bloomberg) -- West Texas Intermediate crude fell, paring a sixth consecutive weekly gain, on speculation prices have climbed more than justified as the heating season nears its end. Brent also slipped, narrowing a weekly advance.
WTI decreased 0.5 percent while diesel futures, a proxy for heating oil, declined for the first time in six days. Supplies of distillate fuel, a category that includes heating oil and diesel, slid by 339,000 barrels last week, Energy Information Administration data yesterday showed, a smaller drop than forecast by analysts in a Bloomberg survey. Gasoline use sank to a one-month low. Futures reached a four-month high Feb. 19.
“The market has climbed as much as possible on heating- fuel demand,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The inexorable march of the calendar means that the heating oil season is coming to an end. Distillate supplies didn’t drop as much as was expected in yesterday’s report, and looking ahead, it showed that gasoline demand was weak.”
WTI for April delivery fell 55 cents to settle at $102.20 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 28 percent below the 100-day average at 4:05 p.m. Crude gained 1.9 percent this week.
Brent for April settlement slipped 45 cents, or 0.4 percent, to end the session at $109.85 a barrel on the London- based ICE Futures Europe exchange. Prices rose 0.8 percent this week. Trading was 29 percent lower than the 100-day average.
The European benchmark crude settled at a $7.65 premium to WTI, little changed from $7.55 at yesterday’s close.
WTI has increased 10 percent in the past six weeks and settled at $103.31 on Feb. 19, the highest level since October.
“A lot of the rise was based on the coming-in of the Brent-WTI spread,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Now that it’s played out, there’s not a lot to support the market.”
WTI advanced for a sixth week, longest run of weekly gains in a year, with crude supplies falling at Cushing, Oklahoma, the delivery point of the contract, and cold weather bolstering fuel demand. The opening of the southern link of TransCanada Corp.’s Keystone XL pipeline in January eased a bottleneck in the central U.S.
Cushing supplies decreased 1.73 million barrels to 35.9 million last week, the lowest level since Oct. 25, yesterday’s EIA report showed. Nationwide crude supplies rose 973,000 barrels to 362.3 million in the seven days ended Feb. 14.
Gasoline demand dropped 3.5 percent to an average 8.03 million barrels a day, the report showed. Distillate consumption slipped 1.4 percent to 3.62 million barrels a day, the least since the week ended Jan. 3.
Ultra low sulfur diesel for March delivery dropped 7.85 cents, or 2.5 percent, to end the session at $3.0992 a gallon in New York. Volume was 37 percent above the 100-day average. Futures settled at $3.1777 yesterday, the most since Jan. 31.
“We’re on the back side of the weather story,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “There’s probably another week or two before the weather story is over.”
Sales of previously owned U.S. homes fell in January to the lowest level in more than a year, figures from the National Association of Realtors showed today in Washington. Purchases slipped 5.1 percent to a 4.62 million annual rate, the fewest since July 2012. The median forecast of 79 economists surveyed by Bloomberg projected sales would drop to a 4.67 million rate.
Crude in New York, which traded as low as $91.24 on Jan. 9, reached $103.80 a barrel on Feb. 19, the highest intraday level since Oct. 10.
“I was surprised the market was able to push as far above $100 as it did,” McGillian said. “We’ve had a mixed bag of economic reports, which isn’t supportive of these levels.”
WTI may fall next week as stockpiles expand, a Bloomberg survey shows. Twenty-three of 28 analysts and traders, or 82 percent, said futures will decrease through Feb. 28. Four respondents expected prices to gain while one forecast there will be little change.
Implied volatility for at-the-money WTI options expiring in April was 16 percent, up from 15.8 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 338,840 contracts at 4:05 p.m. It totaled 418,609 contracts yesterday, 17 percent below the three-month average. Open interest was 1.63 million contracts.
--Editors: Margot Habiby, Bill Banker