Oil rebounded from the lowest level in 10 weeks as traders speculated recent declines may have been excessive, while a North Sea pipeline system remained shut after a platform leak.
West Texas Intermediate advanced as much as 0.6 percent, and Brent futures as much as 0.9 percent. The Brent pipeline system was closed for a fourth day after an oil leak was discovered March 2 on the Cormorant Alpha platform, according to Abu Dhabi National Energy Co. (TAQA) PJSC, the operator known as Taqa. U.S. crude stockpiles probably increased for a seventh week, the longest stretch since May, a Bloomberg News survey showed before Energy Department data tomorrow.
“It’s worth keeping an eye on developments at Cormorant Alpha since any prolonged disruption in the North Sea would support Brent,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who predicts that Brent will trade in a range of $109 to $112 a barrel this month.
WTI for April delivery rose as much as 58 cents to $90.70 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.65 at 1:24 p.m. London time. The volume of all futures traded was 28 percent below the 100-day average. The contract fell 56 cents to $90.12 yesterday, the lowest close since Dec. 24.
Brent for April settlement on the London-based ICE Futures Europe exchange gained as much as 97 cents, or 0.9 percent, to $111.06 a barrel. The volume of all futures traded was 38 percent above the 100-day average. The European benchmark grade was at a $20.14 premium to WTI, widening for a fourth day.
WTI rebounded as a technical indicator showed prices may have fallen too quickly for further losses to be sustainable. The 14-day relative strength index yesterday dropped below 30 for the first time since June 28, signaling the market may be oversold. Today’s reading was around 32.
Production from the 27 North Sea oil fields that make up the Brent system remained shut and a series of safety checks must be completed before it can be reopened, an official at Taqa who asked not to be identified because of company policy, said today by phone from Aberdeen, Scotland, without detailing a time-frame.
The system normally carries 90,000 barrels a day of crude and accounts for about 10 percent of the U.K.’s oil production. About 10,000 barrels a day were already offline following a similar incident at the same platform on Jan. 14.
U.S. crude inventories probably rose 788,000 barrels last week, according to the median estimate of 10 analysts surveyed by Bloomberg before tomorrow’s Energy Department report. Gasoline stockpiles decreased 250,000 barrels and distillate supplies slid 1 million barrels, the survey showed.
The American Petroleum Institute is scheduled to release separate supply data today. The industry group 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 Information Administration, the Energy Department’s statistics unit, for its weekly survey.
“We have an improvement in general market sentiment,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “But it’s too early to call for a new uptrend in prices.”
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