WTI Falls From 6-Week High on U.S. Supply Forecast; Brent Drops

Apr 15, 2014 8:53 am ET

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April 15 (Bloomberg) -- West Texas Intermediate fell from the highest price in six weeks amid speculation that crude inventories increased in the U.S., the world’s biggest oil consumer. Brent declined on signs of weaker growth in China.

Futures dropped as much as 1.1 percent in New York after advancing the past two days amid unrest in Ukraine. Crude stockpiles probably expanded by 1.5 million barrels last week, the 12th gain in 13 weeks, according to a Bloomberg News survey before Energy Information Administration data tomorrow. Libya produced 200,000 barrels a day as National Oil Corp. prepared to resume exports from its Hariga terminal.

“The Energy Department report is expected to show a further build in crude oil stocks, which is weighing on market sentiment,” said Myrto Sokou, senior analyst at Sucden Financial Ltd. in London. “The main reason moving crude oil prices at the moment is the escalating crisis in Ukraine.”

WTI for May delivery slid as much as $1.14 to $102.91 a barrel in electronic trading on the New York Mercantile Exchange and was at $103.11 at 1:33 p.m. London time. The contract climbed 31 cents to $104.05 yesterday, the highest close since March 3. Prices are up 4.7 percent this year.

Brent for May settlement decreased as much as 77 cents, or 0.7 percent, to $108.30 a barrel on the London-based ICE Futures Europe exchange. The contract expires today. The more-active June future was down 67 cents at $108.40. The European benchmark crude was at a premium of as much as $5.14 to WTI, the most since April 4. The spread widened for the first time in seven days yesterday to close at $5.02.

Crude Stockpiles

WTI lost 1 percent in March, the most in four months, as U.S. crude inventories increased by more than 16 million barrels. Supplies probably rose to 385.6 million in the week ended April 11, according to the median estimate of eight analysts in the Bloomberg survey.

Gasoline stockpiles are forecast to have shrunk by 1.75 million barrels last week, the survey shows. Distillates, including heating oil and diesel, are projected to remain unchanged at 113 million barrels after three weeks of gains.

The American Petroleum Institute is scheduled to release separate supply data today. The industry group in Washington collects 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 arm.

China Credit

China’s broadest measure of new credit fell 19 percent from a year earlier and money supply grew at the slowest pace on record, underscoring risks of a deeper slowdown as the government tries to curb financial dangers. Aggregate financing was 2.07 trillion yuan ($333 billion) in March, the People’s Bank of China said in Beijing today, down from 2.55 trillion yuan a year ago.

In Libya, the tanker Aegean Dignity is due to arrive at the eastern port of Hariga today to load a 1 million barrel cargo of crude, Arabian Gulf Oil Co., a unit of state-run National Oil, said in a statement today. The parent company on April 10 lifted force majeure restrictions on exports from the facility, one of four terminals seized last year by rebels seeking self-rule in the country’s east.

Libya, the holder of Africa’s largest crude reserves, ranked as the smallest producer in the Organization of Petroleum Exporting Countries, the 12-member group said in its monthly report last week.

In Europe, the crisis over Ukraine can still be resolved diplomatically, without “Russian military intimidation on Ukraine’s borders, armed provocation within Ukraine, and escalatory rhetoric by Kremlin officials,” according to the White House. U.S. President Barack Obama warned Russian President Vladimir Putin of further consequences after clashes between pro-Russian separatists and government forces in Ukraine’s east turned deadly.

“The trend of rising crude supplies hasn’t been good for the price,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “That will quickly override anything that’s happening in the Ukraine.”

--With assistance from Heesu Lee in Seoul.