WTI Drops to Five-Week Low as Crude Supplies Rise; Brent Falls

May 01, 2014 8:07 am ET

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May 1 (Bloomberg) -- West Texas Intermediate fell to a five-week low after U.S. crude inventories extended a record high. Brent declined on signs of an economic slowdown in the U.S. and China, the two largest oil consumers.

Futures slipped 0.9 percent in New York to less than $99 a barrel after capping the biggest monthly drop since November yesterday. Crude stockpiles gained 1.7 million barrels to 399.4 million last week, the highest since the Energy Information Administration began reporting weekly data in 1982. U.S. economic growth stalled in the first quarter while China’s manufacturing grew less than economists estimated in April, separate reports show.

“The U.S. remains very well-supplied,” Olivier Jakob, managing director at Petromatrix GmbH, a consultant in Zug, Switzerland, said in a report. “U.S. production is still increasing and as a result the crude oil stocks in the U.S. Gulf are rising to new record levels week after week.”

WTI for June delivery slid as much as 94 cents to $98.80 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since March 25, and was at $98.88 at 12:42 p.m. London time. The volume of all futures traded was about 27 percent below the 100-day average for the time of day.

Brent for June settlement declined 83 cents to $107.24 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $8.35 to WTI on ICE.

Crude Stockpiles

U.S. crude inventories have climbed to the highest level since April 1931, monthly government data going back to 1920 show. Reports before 1976 were based on Bureau of Mines figures, according to the EIA, the Energy Department’s statistical arm. Alaskan crude in transit was included from 1981.

Stockpiles at Cushing, Oklahoma, the biggest oil-storage hub in the U.S. and the delivery point for New York futures, shrank by 612,000 barrels to 25.4 million during the week ended April 25, according to the EIA.

Inventories in the Gulf Coast, known as PADD 3, rose to 215.3 million barrels, the most since EIA data for the region started in 1990. Supplies there have been growing since January as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from Cushing.

Gasoline supplies increased by 1.6 million barrels to 211.6 million, while distillate stockpiles, a category that includes heating oil and diesel, expanded by 1.9 million to 114.4 million, according to the EIA.

Slowing Growth

“The booming inventories have resulted in a lot of oil and distillate products sitting in the U.S.,” Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S, said in a speech in London today.

U.S. gross domestic product grew at a 0.1 percent annualized rate from January through March, compared with a 2.6 percent gain in the prior quarter, according to the Commerce Department in Washington. In China, the Purchasing Managers’ Index was at 50.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing, less than the 50.5 median estimate in a Bloomberg News survey.

--With assistance from Lananh Nguyen in London.