West Texas Intermediate crude fell for the first time in four days before government data that may show U.S. stockpiles rose from an 82-year high.
Futures slid as much as 1.3 percent as supplies probably climbed by 2 million barrels last week on higher production and weaker demand, according to a Bloomberg survey. The Energy Information Administration will report weekly inventory data tomorrow. Saudi Arabia pumped the most in five months in April, a person with knowledge of the country’s output said. Brent’s premium to WTI widened for a second day.
“High inventories and weak demand do not make a bull market,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
WTI for June delivery slid 97 cents, or 1 percent, to $95.19 a barrel at 10:24 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 5.5 percent above the 100-day average for the time of day. Futures climbed to $96.16 yesterday, the highest close since April 2. Prices jumped 5.6 percent in the previous three sessions.
Brent for June settlement slipped 47 cents, or 0.4 percent, to $104.99 a barrel on the London-based ICE Futures Europe exchange. Volume was 27 percent above the 100-day average.
WTI-Brent Spread
Brent’s premium to WTI widened to as much as $10.11 from yesterday’s settlement of $9.30 as Israeli Prime Minister Benjamin Netanyahu affirmed his country’s right to self-defense and Syria threatened retaliation against Israel after an air strike May 5. U.K. businesses were closed yesterday for a public holiday, and trading volume in Brent was 44 percent below the three-month average.
“The spread is going to widen for the simple fact that geopolitical risk is going to put a little bit of a premium on Brent versus WTI,” said Rich Ilczyszyn, chief market strategist and founder of commodities trading firm Iitrader.com in Chicago. “We have plenty of supplies with WTI. The spread will widen back to the $10 to $15 area on geopolitical risk and supply, demand situation in the U.S.”
U.S. crude stockpiles gained 0.5 percent last week to 397.3 million last week barrels, according to the Bloomberg survey, heading for the highest level since 1931. Ten respondents forecast an increase and one no change in inventories.
“It’s hard to maintain a strong rally when you are concerned about demand and increasing supplies,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
U.S. Output
U.S. oil production, which climbed to the highest level since 1992 in April, has exceeded 7 million barrels a day since early February, according to the EIA, the Energy Department’s statistical arm. Gasoline demand slumped 3.8 percent to 8.42 million barrels a day in the week ended April 26 and imports rose 8 percent.
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 EIA for its weekly survey.
Saudi Arabia, the world’s largest crude exporter, pumped 9.32 million barrels a day in April, about 180,000 barrels more than in March, the person said, declining to be identified because the information is confidential. Output last month was the most since November, when the kingdom pumped 9.49 million barrels a day, oil ministry data showed.
