WTI Rebounds as Gasoline Stockpiles Seen Shrinking; Brent Gains

Apr 08, 2014 8:09 am ET

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April 8 (Bloomberg) -- West Texas Intermediate crude rebounded amid speculation that gasoline supplies dropped for a seventh week in the U.S., the world’s biggest oil consumer. Brent rose in London on renewed tensions between the West and Russia over Ukraine.

Futures gained as much as 1.1 percent in New York, rising for the third time in four days. Gasoline inventories probably shrank by 1 million barrels last week, according to a Bloomberg News survey of analysts before Energy Information Administration data tomorrow. Russia called on Ukraine to halt all military preparations in the east “immediately” or risk civil war.

“The market is starting to look forward to tomorrow’s U.S. oil inventory data,” Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo, said today in a report. “The geopolitical risk is increasing with increasing tension between Russia and Ukraine.”

WTI for May delivery climbed as much as $1.05 to $101.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.41 at 1:05 p.m. London time. The contract lost 70 cents to $100.44 yesterday. The volume of all futures traded was about 27 percent above the 100-day average for the time of day. Prices advanced 3 percent this year.

Brent for May settlement traded 64 cents higher at $106.46 a barrel on the ICE Futures Europe exchange in London. It was at a premium of $5.07 to WTI on ICE, headed for the lowest close since Sept. 23.

The front-month Brent contract was the same price as the second month.

Libyan Supply

Brent, the benchmark grade for half the world’s oil, slid 0.8 percent yesterday, the most since April 1, amid speculation that Libya’s crude exports may triple this month. The holder of Africa’s largest reserves has become the smallest producer in the 12-member Organization of Petroleum Exporting Countries as protests halted output and shipments.

The self-declared Executive Office for Barqa has handed over the Zueitina and Hariga oil terminals to government control, according to Ali Al-Hasy, a spokesman of the group that seeks self-rule for the region also known as Cyrenaica. The April 6 agreement with the government also provides for the rebels to relinquish the other two ports they control, Es Sider and Ras Lanuf, in two to four weeks, he said. The government confirmed the pact in a statement on its website.

Output Volatility

Libya’s production shrank to 250,000 barrels a day last month, compared with 1.4 million a year earlier, a Bloomberg survey of producers and analysts shows.

“News in Libya changes almost every day, from positive to negative and vice versa,” Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna, said today by e- mail. “They produced around 1.3 to 1.4 million barrels per day only 10 months ago. I can’t see this materializing again this year. Regarding Ukraine, as long as the conflict is not escalating, we do not expect this sort of rather low tension would support oil prices.”

Ukraine sent additional police forces into eastern regions after pro-Russian protesters seized government buildings in Donetsk, Luhansk and Kharkiv this week. The U.S. has said there is evidence that some protesters may be paid provocateurs. Russia is the world’s largest producer of crude oil.

Gasoline Stockpiles

In the U.S., gasoline supplies are forecast to have decreased to 214.6 million barrels in the week ended April 4, according to the median estimate of eight analysts in the Bloomberg survey. Refiners typically shut plants for maintenance in late winter before restarting in the spring to meet summer demand for motor fuels.

“Gasoline stockpiles are heading for a five-year low despite the fact that refineries are raising their operating rates after completing regular maintenance,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone today. “Fuel inventories are dropping while we are entering the driving season. We may expect prices to linger slightly above $100 for some time.”

Distillate inventories, including heating oil and diesel, are projected to be unchanged at 113 million barrels after two weeks of increases, the survey shows. Crude stockpiles probably expanded by 1.4 million barrels to 381.5 million.

The EIA, the Energy Department’s statistical arm, is scheduled to release its weekly report tomorrow. The industry- funded American Petroleum Institute in Washington will publish its own supply data today.

WTI has technical support along its 20-day moving average, said Ric Spooner, a chief strategist at CMC Markets in Sydney. Futures halted an intraday drop yesterday near this indicator, at about $99.90 a barrel today. Buy orders tend to be clustered around chart-support levels.

--With assistance from Ben Sharples in Melbourne and Heesu Lee in Seoul.