West Texas Intermediate crude(NYMEX:CLN14) headed for the first weekly loss in four weeks as rising inventories signaled ample U.S. supplies and U.S. consumer spending fell in April.
WTI dropped for the third time in four days. Crude stockpiles climbed 1.66 million barrels to 393 million last week, the Energy Information Administration reported yesterday. Household purchases, which account for about 70 percent of the economy, dropped 0.1 percent, the first decrease in a year, the Commerce Department said today. Brent slipped as Russia pulled back most of its troops from the border with Ukraine.
“The builds in crude inventory are weighing on the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market has a hard time attracting fresh buyers with U.S. inventories near record highs. The Russians pulled their troops back and that probably diminished some geopolitical risk.”
WTI for July delivery slid 89 cents, or 0.9 percent, to $102.69 a barrel at 10:56 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 44 percent below the 100-day average. Prices are down 1.6 percent this week and up 3 percent this month.
Brent for July settlement dropped 60 cents, or 0.6 percent, to $109.37 a barrel on the London-based ICE Futures Europe exchange. Volume was 15 percent below the 100-day average. The European benchmark crude traded at a premium of $6.68 to WTI, compared with $6.39 yesterday.
U.S. crude inventories increased as domestic output stayed at the highest level since 1986. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked oil trapped in shale formations in North America. Stockpiles rose to 399.4 million barrels on April 25, the most since the EIA, the Energy Department’s statistical arm, began publishing weekly data in 1982.
“Total stocks are high, so there shouldn’t be any strong fundamental reason for prices to move too much higher,” Tony Machacek, a broker at Jefferies Bache Ltd. in London, said by e- mail.
Consumer spending adjusted for inflation fell 0.3 percent in April, the most since September 2009, according to the Commerce Department data.
“The economic data was not really giving us expectations that demand will be strong,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Supply is pretty ample here.”
Russia, the world’s biggest energy exporter, has withdrawn a majority of its military forces from the Ukrainian border, Rear Admiral John Kirby, a Pentagon spokesman, said today.
About seven battalions of Russian troops, or “several thousands,” remained in the Ukrainian border area, Kirby told reporters traveling to Singapore with U.S. Defense Secretary Chuck Hagel. Confirmation of the partial withdrawal emerged hours after separatist rebels downed a military helicopter in eastern Ukraine, killing a general and 13 troops.
Ukrainian President-elect Petro Poroshenko has vowed to wipe out the insurgents and re-establish order after winning office on May 25 with 54.7 percent of the vote.