Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: Oil | Price | US | Stockpile

Oil Price Slides 2.5% as US Stockpiles Grow

Thursday, 21 February 2013 03:22 PM EST

The price of the benchmark U.S. crude oil, West Texas Intermediate, slid 2.5 percent in New York Thursday to the lowest level this year as a government report showed that U.S. crude stockpiles climbed to the highest level since last July.

The Energy Information Administration said that supplies rose 4.14 million barrels last week to 376.4 million. A 2 million barrel gain had been projected, according to a Bloomberg survey. Production jumped to the most in more than 20 years. Markets also declined after the Federal Reserve signaled it may consider slowing the pace of asset purchases, according to minutes of the Jan. 29-30 meeting, released Wednesday.

“We’re awash in crude at the moment, and it doesn’t look like that will change anytime soon,” said Adam Wise, who helps manage a $6 billion oil and gas bond portfolio as a managing director at Manulife Asset Management in Boston. “The significant increase in U.S. output is having a global impact. Plans to bring foreign oil here are being reassessed, making additional barrels available in other markets.”

WTI oil for April delivery dropped $2.38 to $92.84 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 31. It was the biggest decline since Nov. 20. The volume of all futures traded was 16 percent above the 100-day average at 2:36 p.m.

Brent Premium

Brent crude for April settlement fell $1.90, or 1.6 percent, to $113.70 a barrel on the London-based ICE Futures Europe exchange. The contract touched $113.32, the least since Jan. 29. Volume was 47 percent above the 100-day average.

The European benchmark grade traded at a premium of $20.86 to WTI futures, compared with $20.38 Wednesday. The gap expanded to $23.18 on Feb. 8, the widest since Nov. 26.

Oil’s decline accelerated after futures dropped below the 50-day moving average for the first time since Dec. 18, according to data compiled by Bloomberg. Investors typically sell contracts when the moving average is breached.

The EIA, the Energy Department’s statistical arm, released its inventory report a day later than usual because of the Presidents Day holiday on Monday.

U.S. crude production rose to 7.12 million barrels a day in the week ended Feb. 15, the most since August 1992, the EIA report showed. Output has gained 22 of the last 24 weeks as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma.

Cushing Supply

Crude stockpiles at Cushing, Oklahoma, the delivery point for New York futures, climbed 417,000 barrels to 50.7 million barrels last week, the EIA said. Supplies at the hub rose to a record 51.9 million barrels in the week ended Jan. 11.

Refineries operated at 82.9 percent of capacity last week, the lowest level since March. Units are often idled for maintenance in February as attention shifts away from heating oil and before gasoline use rises.

“The fundamentals are reasserting themselves,” said Julius Walker, the global energy markets strategist at UBS Securities LLC in New York. “The market will be getting looser this quarter. Production in the U.S. and elsewhere is growing strongly and that’s feeding through into higher inventories.”

Several Fed policy makers said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases, according to the minutes released late Wednesday. The debt buying, known as quantitative easing, aim to keep long-term rates low and support economic growth.

Fed Minutes

“The Fed minutes yesterday were certainly spooky for commodity markets,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “They signal that quantitative easing may have an end point. This undermines a major support of the market.”

Commodities also declined as the dollar climbed against major currencies, curbing the appeal of dollar-denominated raw materials as an investment. The U.S. currency rose as much as 0.9 percent against the euro to the highest level since Jan. 10.

“We’re looking at a weaker, more volatile market, in the months ahead,” Wise said.

Western governments will revise their offer to Iran at talks on the country’s nuclear work next week, according to France’s Foreign Ministry. Stalled multilateral negotiations on the Islamic republic’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.

Nuclear Claims

The U.S. and its allies say Iran may seek to make an atomic bomb, while the Islamic republic says developments are for civilian purposes. Sanctions aimed at stopping the program have hindered its ability to export oil. Iran pumped 2.6 million barrels a day in January, the lowest level since 1990, according to a Bloomberg survey of oil companies, producers and analysts.

Electronic trading volume on the Nymex was 524,465 contracts as of 2:37 p.m. It totaled 708,948 contracts Wednesday, 35 percent above the three-month average. Open interest was 1.64 million.

© Copyright 2023 Bloomberg News. All rights reserved.

The price of the benchmark U.S. crude oil, West Texas Intermediate, slid 2.5 percent in New York Thursday to the lowest level this year as a government report showed that U.S. crude stockpiles climbed to the highest level since last July.
Thursday, 21 February 2013 03:22 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved