(For Bloomberg fair value curves, see CFVL <GO>.)
April 23 (Bloomberg) -- West Texas Intermediate crude fell to a two-week low as U.S. supplies reached the highest level in 83 years. Brent also slipped.
WTI futures dropped for a second day. Stockpiles rose 3.52 million barrels to 397.7 million in the week ended April 18, the Energy Information Administration reported, exceeding the estimate of 3 million by analysts in a Bloomberg survey. Declines were limited on concern that the clash over Ukraine between the West and Russia may intensify and a decrease in supplies at Cushing, Oklahoma.
“There’s plenty of crude,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in Boston. “The high price of crude is more a function of nervousness about the situation in Eastern Europe than anything else.”
WTI for June delivery slid 31 cents, or 0.3 percent, to $101.44 a barrel on the New York Mercantile Exchange, the lowest settlement since April 7. The volume of all futures was 4.6 percent above the 100-day average.
Brent for June settlement fell 16 cents to $109.11 a barrel on the London-based ICE Futures Europe exchange. Volume was 19 percent below the 100-day average. The European benchmark crude’s premium was $7.67 a barrel versus $7.52 yesterday.
The U.S. inventory level was the highest in EIA weekly data begun in 1982 and monthly government data going back to 1920. Reports before 1976 were based on data from the Bureau of Mines, according to the EIA, and stockpiles of Alaskan crude oil in transit were included starting in 1981.
The 3.52 million-barrel gain was the 13th in 14 weeks. U.S. production rose to a 26-year high of 8.36 million barrels a day.
“Fundamentals are very bearish and the market is in a downward turn,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The build in crude is bigger than expected. Prices are too high.”
Supplies on the Gulf Coast, known as PADD 3, increased to 209.6 million, the most since EIA began recording that data in 1990. U.S. oil demand slipped to 18.1 million barrels a day last week, the least since June 7. Refinery crude inputs rose to 16 million barrels a day, a three-month high.
“We have more than ample supplies in the U.S.,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s hard to get too excited about WTI when you have so much oil in storage.”
Supplies at Cushing, the delivery point for WTI futures, declined 788,000 barrels to 26 million, the lowest level since October 2009.
“Those low Cushing inventories are going to lend support to the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The Ukraine situation is worsening again.”
Ukraine moved closer to a new round of hostilities after the government in Kiev said it’s resuming operations to oust militants from eastern cities and Russia pledged to defend its citizens in the neighboring country.
Russian Foreign Minister Sergei Lavrov said his country is prepared to retaliate if its “legitimate interests” are “attacked directly,” drawing a parallel with its actions during a 2008 war over the Georgian breakaway region of South Ossetia.
Implied volatility for at-the-money WTI options expiring in June was 16.9 percent, down from 17.3 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 468,229 contracts at 2:53 p.m. It totaled 670,048 contracts yesterday, 24 percent above the three-month average. Open interest was 1.62 million contracts, the lowest level since March 26.