By Grant Smith & Jacob Adelman - Mar 26, 2013 2:17 PM GMT+0400
Futures were little changed after advancing a second day yesterday. Crude stockpiles increased by 1.4 million barrels to 384.1 million last week, the highest since June, according to the median of seven analyst estimates before an Energy Information Administration report tomorrow. Saudi Arabian Oil Co., the world’s biggest crude exporter, expects to become the top producer of refined products, Khalid al-Falih, the company’s chief executive officer, said today in Beijing.
West Texas Intermediate traded close to the highest level in five weeks. U.S. crude inventories probably rose as domestic output stayed near the strongest in two decades, a Bloomberg News survey showed.
“Prices have come down to more realistic levels and we expect them to remain here,” said Filip Petersson, a commodities strategist at Stockholm-based SEB AB, who predicts that Brent, the European benchmark, will average $107.50 a barrel during the second quarter.
WTI for May delivery was at $95.22 a barrel, up 41 cents, in electronic trading on the New York Mercantile Exchange at 9:49 a.m. in London. The volume of all futures traded was 20 percent below the 100-day average for the time of day. The contract rose $1.10 to $94.81 yesterday, the highest close since Feb. 19. Prices have advanced 3.7 percent this year.
Brent oil for May settlement was down 22 cent at $107.95 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 20 percent above the 100-day average. Prices are down 2.8 percent in 2013. The European benchmark crude’s premium to WTI was at $12.75. It closed at $13.36 yesterday, the least since July.
U.S. Supplies
Longer term, FACTS Global Energy Inc. forecast that oil will drop by as much as $40 a barrel by 2015 or 2016 and sell at $80 to $90 a barrel by the end of the decade, the consultant’s chairman, Fereidun Fesharaki, said today at an industry conference in Fujairah in the United Arab Emirates. Prices will fall on increased crude output, production of liquid fuels from shale in the U.S., and greater use of natural gas, he said.
U.S. gasoline stockpiles probably slid by 1 million barrels last week to 221.8 million, according to the Bloomberg survey taken before the report by the Energy Information Administration, the Energy Department’s statistical arm.
Gasoline consumption dropped 3.5 percent in the week ended March 15 to 8.32 million barrels a day, the lowest since Jan. 11, EIA data show. Regular gasoline at U.S. pumps fell to $3.68 a gallon, down from $3.696 a gallon a week ago, the agency said on its website yesterday.
Crude Output
Inventories of distillate fuel, a category that includes heating oil and diesel, probably fell 1 million barrels to 118.8 million, the Bloomberg survey showed. A decline of that size would leave supplies at the lowest level since December.
The industry-funded American Petroleum Institute is scheduled to release separate inventory data today. 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 EIA for its weekly survey.
U.S. crude production was 7.15 million barrels a day in the week ended March 15, 9,000 less than the 21-year high reached in the seven days ended March 8.
Saudi Arabian Oil, known as Saudi Aramco, is expanding refining and petrochemical production to meet domestic demand and export products that can fetch higher prices than crude. It plans to double its global refining capacity to 8 million barrels a day in 10 years, al-Falih, the company’s CEO, said in January 2012.
Eagle Ford
Crude production in Texas’s Eagle Ford shale formation climbed 50 percent in January from a year earlier, boosted by drilling from companies including ConocoPhillips (COP) andChesapeake Energy Corp. (CHK), according to preliminary data released by the Texas Railroad Commission yesterday. The nine geographic fields that make up the majority of the Eagle Ford yielded 373,303 barrels a day, the figures show.
“The market’s been watching the U.S. reserves quite closely, which have been climbing somewhat, as domestic production has been coming on stream and demand has remained relatively flat,” said David Lennox, an analyst at Fat Prophets in Sydney who predicts WTI will struggle to rise above $95 a barrel for the rest of this year. “Barring any supply shock events, we believe the topside will be somewhat limited.”
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net; Jacob Adelman in Tokyo at jadelman1@bloomberg.net
To contact the editors responsible for this story: To contact the editor responsible for this story: Raj Rajendran at rrajendran4@bloomberg.net; Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
