Hail Shale: Oil Price Drops As US Oil Supplies Advance To 83-Year High

  • Date: 23/04/14
  • Moming Zhou and Mark Shenk, Bloomberg

West Texas Intermediate crude traded near $102 a barrel as U.S. supplies reached the highest level in more than 80 years.

Brent slipped. WTI futures ranged from $101.20 to $102.08. Stockpiles rose 3.52 million barrels to 397.7 million in the week ended April 18, the Energy Information Administration reported, exceeding the estimate of 3 million by analysts in a Bloomberg survey. Declines were limited on concern the clash over Ukraine between the West and Russia may intensify.

“There’s plenty of crude,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in Boston. “The high price of crude is more a function of nervousness about the situation in Eastern Europe than anything else.”

WTI for June delivery rose 14 cents to $101.89 a barrel at 11:31 a.m. on the New York Mercantile Exchange. The volume of all futures was 23 percent above the 100-day average.

Brent for June settlement fell 40 cents to $108.87 a barrel on the London-based ICE Futures Europe exchange. Volume was 9.4 percent below the 100-day average. The European benchmark crude’s premium to WTI narrowed to $6.98 a barrel.

‘Very Bearish’

The inventory level was the highest in EIA weekly data begun in 1982 and monthly government data going back to 1920. Reports before 1976 were based on data from the Bureau of Mines, according to the EIA, and stockpiles of Alaskan crude oil in transit were included starting in 1981.

The 3.52 million-barrel gain was the 13th in 14 weeks. U.S. production rose to a 26-year high of 8.36 million barrels a day.

“Fundamentals are very bearish and the market is in a downward turn,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The build in crude is bigger than expected. Prices are too high.”

Full story