Nov. 28 (Bloomberg) -- Oil traded near the lowest price in a week in New York amid signs of rising supplies in the U.S. and concern that lawmakers are struggling to reach agreement on how to address the nation’s deficit.
West Texas Intermediate futures declined as much as 0.7 percent. An Energy Department report today may show crude supplies rose by 350,000 barrels to 374.8 million, according to a Bloomberg News survey. U.S. Senate Majority Leader Harry Reid said yesterday he was disappointed with progress made during congressional budget talks over $607 billion in tax increases and spending cuts set to begin in January.
“The market has been kept well-supplied,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd. who predicts Brent crude will recover to $125 a barrel early next year. “Funds are not engaged with the market right now, partly due to potential events such as the U.S. fiscal cliff. Even though everyone assumes it will resolve itself, the question is how close to the edge do we go first?”
Crude for January delivery slid as much as 61 cents to $86.57 a barrel in electronic trading on the New York Mercantile Exchange, and was at $86.60 at 11:58 a.m. London time. The contract decreased 56 cents yesterday to $87.18, the lowest since Nov. 20. Prices are down 12 percent this year.
Brent for January settlement slid 59 cents to $109.26 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.66 to WTI, compared with $22.69 yesterday.
WTI in New York is in a downtrend channel going back about eight weeks on the daily technical chart, signaling price advances probably can’t be sustained, according to data compiled by Bloomberg. The upper boundary of this channel is around $88.40 a barrel today, representing technical resistance, where sell orders tend to be clustered.
U.S. crude inventories gained 1.96 million barrels last week, data yesterday from the American Petroleum Institute showed. Gasoline supplies climbed 2.28 million barrels last week, the API said. They are forecast to rise 900,000 barrels in the Energy Department report, according to the Bloomberg survey.
Distillate stockpiles, a category that includes heating oil and diesel, increased 268,000 barrels compared with a projected gain in government figures of 500,000.
“Stockpiles are above two-to-three year averages, so there’s ample supply,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “The market is still ignoring the builds. I would look at it as a seasonal adjustment, as we’re expecting winter to be cooler than last year.”
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.