WTI Trades Near Two-Week High; IEA Trims Oil Demand Forecast

PHOTO: Barges pass by storage tanks at oil refineries along the Houston Ship Channel in Houston, Texas. Carlos Javier Sanchez/Bloomberg News

West Texas Intermediate traded near the highest level in two weeks after an industry report showed U.S. crude stockpiles fell for the first time since February. The IEA trimmed its 2013 global oil demand forecast.

Futures advanced a fifth day, the longest run of gains since December. Crude inventories shrank by 1.38 million barrels last week, the American Petroleum Institute said. An Energy Department report today may show supplies rose by 2.3 million, according to a Bloomberg News survey. The International Energy Agency curbed demand estimates for this year by 60,000 barrels a day to 90.6 million.

“The market is pretty well balanced,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “We are still in the process of just establishing a range.”

WTI for April delivery was at $92.71 a barrel, up 17 cents, in electronic trading on the New York Mercantile Exchange as of 12:08 p.m. London time. The volume of all futures traded was 26 percent above the 100-day average. The contract rose 48 cents to $92.54 yesterday, the highest close since Feb. 27.

Brent for April settlement on the London-based ICE Futures Europe exchange, which expires tomorrow, was 47 cents lower at $109.18 a barrel. The more-actively traded May contract was down 42 cents at $108.81. The European benchmark grade was at a premium of $16.46 to WTI. It shrank for a fifth day yesterday to $17.11, the narrowest closing gap in six weeks.

Elusive Growth

The IEA today curbed estimates for global fuel consumption in 2013, predicting demand will increase by 820,000 barrels a day amid “elusive” economic growth.

WTI may extend gains as a measure of technical momentum increases. The moving-average convergence divergence indicator is above its signal line today for the first time since Feb. 1, according to data compiled by Bloomberg. Investors typically buy contracts on a so-called bullish MACD crossover. Crude advanced from around $88 a barrel to above $98 over six weeks from mid- December after a similar chart pattern.

Prices have rallied from the 200-day moving average, at about $90.38 a barrel today, and may stall at around $95, the low reached in mid-February, said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
The U.S. Energy Information Administration cut its 2013 forecast for WTI in its monthly Short-Term Energy Outlook yesterday. The crude will average $91.92 this year, down from a February estimate of $92.81, according to the Energy Department’s statistical unit.

Corrective Rally

U.S. gasoline stockpiles dropped by 3.1 million barrels last week, the API data showed. They are forecast to decrease 1.2 million barrels in the government report, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, slid 2.2 million barrels in the API report compared with a projected 2 million barrel decline in the survey.

“The API figures provided mildly positive sentiment,” Spooner said. “This is a corrective rally, there’s been no real change in the bigger demand/supply picture that would suggest this was the beginning of any significant move.”

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, which is scheduled to be released at 10:30 a.m. in Washington.

India Talks

Saudi Arabia, Iraq and Kuwait, OPEC’s biggest producers, are in talks to ship extra crude to India as the nation prepares to halt purchases from Iran because of global sanctions, four people with knowledge of the matter said.

Indian refiners, which are waiting for an order from the oil ministry to stop buying Iranian cargoes, are discussing annual term contracts with the countries for the year starting April 1, the people said this week, asking not to be identified because the information is confidential.

Iranian oil shipments advanced 13 percent last month even as the U.S. implemented sanctions complicating sales from the Persian Gulf country, the IEA said in its monthly oil report.

Countries purchased 1.28 million barrels a day from Iran in February, compared with an upwardly revised 1.13 million in January, the Paris-based adviser to 28 oil-consuming nations said in the report.

South Sudan and Sudan agreed to order companies to resume southern oil shipments through a Red Sea export terminal within two weeks, more than a year after they were halted over a dispute about transportation fees, according to an agreement signed yesterday in Ethiopia’s capital, Addis Ababa. South Sudan’s production was 350,000 barrels a day before the halt, according to data compiled by Bloomberg.