Bloomberg News

WTI Oil Drops to One-Month Low as Supply Highest Since December

February 21, 2013

West Texas Intermediate crude plunged a second day to its lowest in more than a month, extending its biggest tumble since November. U.S. crude stockpiles rose to their highest level since December, according to the American Petroleum Institute.

Futures fell as much as 1.8 percent to their lowest since Jan. 16. U.S. crude inventories gained 2.96 million barrels last week to 372 million, API data showed yesterday. The Federal Reserve signaled it may consider slowing the pace of asset purchases, according to minutes of the Jan. 29-30 meeting. Western governments will revise their offer to Iran at talks on the country’s nuclear work next week, according to France’s Foreign Ministry.

“The much-needed correction has taken some steam off the overbought market,” said Andrey Kryuchenkov, a commodities analyst at VTB Capital in London, who forecast last week that oil prices would drop. “Short-term fundamentals simply do not justify sustained gains.”

WTI for April delivery slid as much as $1.70 to $93.52 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Jan. 16, and was at $93.83 at 1:11 p.m. London time. The March contract expired 2.3 percent lower at $94.46 yesterday, the steepest slump since Nov. 20. The volume of all futures traded is 88 percent above the 100-day average.

Brent for April settlement tumbled as much as $1.91 to $113.69 a barrel on the London-based ICE Futures Europe exchange, the lowest since Jan. 29. Volume was more than 70 percent more than the 100-day average. The European benchmark grade was at a premium of $20.27 to WTI futures, compared with $20.38 yesterday. The gap expanded to $23.18 on Feb. 8, the widest since Nov. 26.

Fuel Stockpiles

Oil is extending losses in New York after breaching technical support yesterday, according to data compiled by Bloomberg. Futures settled below $95 a barrel, the trough between a “double-top” that formed after advances stalled near $98 on Jan. 31 and Feb. 13. The price gap is about $3, signaling crude may fall to around $92 in a so-called reversal. Losses tend to accelerate when chart support fails.

The Energy Department is scheduled to release its inventory report at 11 a.m. in Washington, a day later than usual because of the Presidents Day holiday on Feb. 18. It will probably show that U.S. crude supplies rose by 2 million barrels last week, while gasoline stockpiles declined 900,000 barrels a Bloomberg survey indicated.

Iran Talks

U.S. gasoline stockpiles slid by 122,000 barrels last week to 232.6 million barrels, the API’s data showed. Crude supplies at Cushing, Oklahoma, the delivery point for futures traded on the New York Mercantile Exchange, increased 546,000 barrels to 50.8 million, according to the API.

Distillate inventories, a category that includes heating oil and diesel, dropped by 1.64 million barrels to 126 million barrels. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Stalled multilateral negotiations on Iran’s nuclear work are scheduled to resume in Kazakhstan on Feb. 26. The last round of talks between Iran and world powers, held in Moscow in June, failed to yield results.

“We will make an updated offer that will contain new substantive elements,” the French Foreign Ministry said in an e-mail. “The approach remains that of Baghdad, that is a gradual approach that commences with confidence measures.”

Iraq’s crude oil exports rose in January for the first time since October, according to the marketing unit of the OPEC member state’s Oil Ministry.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net


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