Oil dropped from a nine-month high in New York after a report showed crude stockpiles increased in the U.S., the world’s biggest consumer of the commodity.
Futures slid as much as 0.5 percent, heading for the first decline in more than a week. U.S. inventories rose 3.55 million barrels, data from the American Petroleum Institute showed. A government report today may show they gained 1.35 million barrels, according to a Bloomberg News survey of analysts. Crude’s relative strength index climbed above 70 yesterday, a sign prices may have risen too fast. Oil has gained 2.5 percent this week on concern tension with Iran over its nuclear program could threaten supplies.
“Oil and gas demand in the U.S. has been muted for some time,” said David Lennox, an analyst at Fat Prophets in Sydney. The increase in New York crude “from $90 to where it sits now is probably supply shock potential,” he said.
Crude for April delivery fell as much as 56 cents to $105.72 a barrel in electronic trading on the New York Mercantile Exchange and was at $105.82 at 1:12 p.m. Sydney time. The contract yesterday gained 3 cents to $106.28, the highest close since May 4. Prices are 8 percent higher in the past year.
Brent oil for April settlement was at $122.71 a barrel, down 19 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $16.87. It reached a record of $27.88 on Oct. 14.
Gasoline supplies rose 314,000 barrels last week, figures from the industry-funded API showed. They are projected to increase 250,000 barrels in the Energy Department report, according to the median of 10 analyst estimates in the survey. Distillate inventories, a category that includes diesel and heating oil, gained 630,000 barrels compared with a forecast for a 1.5 million barrel decline.
The survey also estimated that refineries operated at 83.5 percent of capacity in the seven days ended Feb. 17, down 0.5 percentage point from the prior week’s one-month high.
The Energy Department is scheduled to release its weekly report at 11 a.m. today in Washington, a day later than usual because the government and financial markets were closed for the Presidents’ Day holiday. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines and files the reports with the government for the report.
Oil’s advance in New York is stalling after the 14-day relative strength index climbed above 70 yesterday for the first time since Nov. 16, according to data compiled by Bloomberg. This indicates futures have risen too quickly and further gains aren’t sustainable. Investors tend to sell contracts when prices are considered overbought. Today’s reading is about 68.4.
Prices advanced yesterday after officials from the International Atomic Energy Agency, sent to Iran to defuse tensions over the country’s nuclear program, were denied access to a military base. Talks “couldn’t finalize a way forward,” the IAEA’s chief inspector, Herman Nackaerts, told reporters in Vienna yesterday upon his return from Tehran.
Iran produced 3.5 million barrels of oil a day last month, according to analysts estimates compiled by Bloomberg. Saudi Arabia, the biggest member in the Organization of Petroleum Exporting Countries, had output of 9.7 million barrels a day.
Goldman Sachs Group Inc. recommended buying September crude futures on the Nymex on speculation supplies will tighten after the reversal of the Seaway pipeline in June, according to a weekly report emailed today.
The reversal of the 500-mile (800-kilometer) Enterprise Products Partners LP and Enbridge Inc. pipeline will allow oil from the Midcontinent to reach the Gulf of Mexico for export. Goldman closed a buy recommendation for July Brent futures in London, it said.LinkedInGoogle +1Print