WTI Trades Near Five-Month High on Fuel Supplies; Brent Steady

West Texas Intermediate crude traded near the highest price since September amid speculation that distillate-fuel inventories declined in the U.S., the world’s biggest oil consumer. Brent was steady inLondon. Futures were little changed in New York after rising 2.3 percent yesterday, the most in three months, as Ukraine mobilized its army in response to Russian forces taking control of the Crimea peninsula.Distillate stockpiles, including heating oil and diesel, probably dropped by 1 million barrels last week, according to a Bloomberg News survey of analysts before an Energy Information Administration report tomorrow. WTI’s rally may be unsustainable, a technical indicator shows. “Demand in the U.S. is still quite good,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “Saber-rattling over Ukraine spooked the market yesterday. The arrival of an external power pushed markets a notch higher.” WTI for April delivery was at $104.70 a barrel in electronic trading on the New York Mercantile Exchange, down 22 cents, at 1:16 p.m. Singapore time. The contract climbed $2.33 to $104.92 yesterday, the highest close since Sept. 19. The volume of all futures traded was about 9 percent below the 100-day average. Prices have gained 6.4 percent this year. Brent for April settlement slid 1 cent to $111.19 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.49 to WTI. The spread closed at $6.28 yesterday, narrowing for a fifth day.

Fuel Supplies

WTI advanced 5.2 percent last month as cold weather boosted demand for heating fuels and crude stockpiles at Cushing, Oklahoma, shrank with the opening of a new pipeline. The storage hub, the largest in the U.S., is the delivery point for New York-traded futures. Total U.S. crude inventories probably increased by 1.15 million barrels in the week ended Feb. 28, according to the median estimate of eight analysts surveyed by Bloomberg before the EIA report. Gasoline supplies are projected to have fallen by 1 million, the survey shows. The American Petroleum Institute is scheduled to release separate stockpile data today. The industry group in Washington collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey. WTI’s 14-day relative strength index closed at 71.9 yesterday, the highest level since Feb. 19, data compiled by Bloomberg show. Today’s reading is above 70, signaling the market remains overbought.

Ukraine Tension

Oil’s price surge yesterday was a “knee-jerk reaction” to escalating tension between Ukraine andRussia and investor concerns of a supply disruption are misplaced, according to Societe Generale SA. “If Russia were to cut off crude oil exports through Ukraine, they would be hurting themselves more than they would hurt Ukraine,” Michael Wittner, the bank’s head of oil market research in New York, said in an e-mailed note. “If a Russian natural gas disruption to Ukraine would have an impact on the oil markets, we believe that the International Energy Agency would quickly coordinate a release of strategic oil reserves by member countries.” Russia, the world’s biggest energy exporter, justified its intervention in Crimea as legitimate, citing threats posed by extremists to the region’s ethnic-Russian population. President Barack Obamasaid the U.S. and its allies are preparing sanctions to show the government in Moscow that its actions in Ukraine will be “costly.” Source :   http://www.bloomberg.com/news/2014-03-03/wti-trades-near-five-month-high-as-fuel-supplies-seen-falling.html