23 October 2013, News Wires – US crude fell towards $96 a barrel to its lowest since early July on Wednesday, outpacing a smaller drop in Brent futures as the American benchmark came under pressure from ample supplies and a further inventory build-up in the US.
Maintenance at US refineries and pipeline outages have led to an increase in domestic stocks, stretching Brent’s premium to West Texas Intermediate (WTI) to more than $13 a barrel, its widest since April.
US crude fell $1.83 to $96.47 and earlier reached $96.16, its lowest since 1 July. Brent crude fell $1.23 to $108.74 a barrel by 1445 GMT, after hitting a session high of $110.06.
“The weakness in the Brent/WTI spread reflects refinery maintenance and growing crude stocks in the US,” commented Christopher Bellew, an oil broker at Jefferies Bache to Reuters.
“Other bearish factors are the warm autumn in the northern hemisphere and Libyan oil coming back onto the market.”
Adding to a series of reports of rising crude stocks, the US government’s Energy Information Administration – returning to its normal schedule after the government shutdown – said inventories rose by 5.2 million barrels, more than forecast.
On Monday, the US government said they rose by 4 million barrels in the week to 11 October and increased at the Cushing storage hub for the first time since the end of June.
The EIA report released at 1430 GMT showed a larger rise in crude stocks than the 2.9-million-barrel increase expected by analysts and the 3-million-barrel increased reported by industry group the American Petroleum Institute on Tuesday.
Brent could break below $109, Bellew said earlier in the day, and other analysts saw a weakening chart pattern for US crude. Its 200-day moving average at $98.62 is now a resistance level after prices fell below that mark.
“The technical picture in WTI is turning more negative as WTI broke the support of the 200-day moving average and it has its five-day moving average trending below the nine-day,” said Olivier Jakob, consultant at Petromatrix.
Stockpiles also built in China, the second-largest oil consumer, in September, official news agency Xinhua said on Wednesday, as crude imports jumped to a record high.
Rising output of shale oil added to the picture of an amply supplied US market. The Eagle Ford formation in Texas has beaten North Dakota’s Bakken to the milestone of 1 million barrels per day, the EIA said.
Uncertainty over the future of Scotland’s Grangemouth refinery also supported Brent. The refinery provides steam to a plant which processes Forties, the largest crude oil stream underpinning Brent futures.