Feb. 21 (Bloomberg) -- West Texas Intermediate crude fell, paring a sixth consecutive weekly gain, on speculation prices have climbed more than justified as heating season approaches its end. Brent also slipped, narrowing a gain for the week.
WTI slid as much as 0.7 percent while diesel futures, a proxy for heating oil, declined for the first time in six days. Supplies of distillate fuel, a category that includes heating oil and diesel, decreased by 339,000 barrels last week, Energy Information Administration data showed, a smaller drop than forecast by analysts in a Bloomberg survey. Futures reached a four-month high on Feb. 19.
“The market has climbed as much as possible on heating- fuel demand,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The inexorable march of the calendar means that the heating oil season is coming to an end. Distillate supplies didn’t drop as much as was expected in yesterday’s report, and looking ahead it showed that gasoline demand was weak.”
WTI for April delivery dropped 62 cents, or 0.6 percent, to $102.13 a barrel at 11:18 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 24 percent below the 100-day average. Crude is up 1.9 percent this week and 10 percent in the past six weeks.
Brent for April settlement slipped 48 cents, or 0.4 percent, to $109.82 a barrel on the London-based ICE Futures Europe exchange. Prices are up 0.7 percent this week. Trading was 35 percent lower than the 100-day average.
The European benchmark crude traded at $7.69 premium to WTI, little changed from $7.55 yesterday.
“A lot of the rise was based on the coming in of the Brent-WTI spread,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Now that it’s played out, there’s not a lot to support the market.”
Ultra low sulfur diesel for March delivery dropped as much as 2.4 percent to $3.1017 a gallon in New York. Futures settled at $3.1777 yesterday, the highest level since Jan. 31.
WTI is set for the longest run of weekly gains in a year with supplies falling at Cushing, Oklahoma, the delivery point of the contract, and cold weather bolstering fuel demand. The opening of the southern link of TransCanada Corp.’s Keystone XL pipeline in January eased a bottleneck in the central U.S.
“We’re on the backside of the weather story,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “There’s probably another week or two before the weather story is over.”
Sales of previously owned U.S. homes fell in January to the lowest level in more than a year, figures from the National Association of Realtors showed today in Washington. Purchases decreased 5.1 percent to a 4.62 million annual rate last month, the fewest since July 2012. The median forecast of 79 economists surveyed by Bloomberg projected sales would drop to a 4.67 million rate.
WTI, which traded as low as $91.24 on Jan. 9, reached $103.80 a barrel on Feb. 19.
“I was surprised the market was able to push as far above $100 as it did,” McGillian said. “We’ve had a mixed bag of economic reports, which isn’t supportive of these levels.”
WTI may fall next week as stockpiles expand, a Bloomberg survey shows. Twenty-three of 28 analysts and traders, or 82 percent, said futures will decrease through Feb. 28. Four respondents expected prices to gain while one forecast there will be little change.