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WTI oil drops from 5-week high on supply outlook

West Texas Intermediate crude fell from a five-month high on forecasts that U.S. inventories increased last week. Brent slipped as Libya prepared to resume exports from its Hariga terminal.

WTI slid as much as 1.1 percent. Supplies probably grew to the most since November, a Bloomberg survey showed before an Energy Information Administration report tomorrow.

A tanker with plans to load 1 million barrels of oil docked Tuesday at the formerly rebel-held oil port in eastern Libya, said Mohammed Elharari, a spokesman for state-run National Oil Corp. Brent reduced losses on mounting tension between Ukraine and Russia.

“We are going to see another build in inventories,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The elements are in place for the price to go much lower. It looks like Libya is getting some oil out and it’s putting some downward pressure on oil.”

WTI for May delivery slipped 26 cents, or 0.3 percent, to $103.79 a barrel at 12:54 p.m. on the New York Mercantile Exchange.

The contract climbed to $104.05 Monday, the highest settlement since March 3. It’s up 5.5 percent this year. The volume of all futures was 7.9 percent above the 100-day average.

Brent for May settlement decreased 27 cents to $108.80 a barrel on the London-based ICE Futures Europe exchange. Prices ended the session at $109.07 Monday, the most since March 4. The May contract expires Tuesday.

The more-active June futures rose 26 cents to $109.33. The volume of all futures was 5.3 percent above the 100-day average.

U.S. supplies

The European benchmark was at a premium of $5.01 to WTI, compared with $5.02 Monday.

U.S. crude stockpiles probably expanded by 1.75 million barrels last week, the 12th gain in 13 weeks, the Bloomberg survey showed.

Supplies increased to 384.1 million in the week ended April 4, the most since Nov. 29, the EIA, the Energy Department’s statistical arm, reported last week.

“The focus is on tomorrow’s EIA report,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Crude inventories are high. A lot of money is exiting the market right now.”

The vessel Aegean Dignity, bound for Italy, will start loading oil at Hariga “either tonight or tomorrow morning,” and National Oil is expecting more tankers to arrive at the terminal, Elharari said.

Libya production

National Oil on April 10 lifted force majeure restrictions on exports from the facility, one of four terminals seized last year by rebels seeking self-rule in the country’s east.

“We are getting more oil from Libya and it’s pushing prices down,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

Output from the Organization of Petroleum Exporting Countries member fell to 250,000 barrels a day in March, down from 1.4 million a year earlier, Bloomberg estimates show.

Brent contracts for June through January 2015 rose on concern that tension between Ukraine and Russia, the world’s biggest energy exporter, will disrupt supplies.

Ukraine began a military-backed “anti-terrorist” operation in its eastern Donetsk region, where militants have seized buildings. Russian President Vladimir Putin said he’s being called on to intervene in the former Soviet republic.

The United States and European Union deliberated deepening sanctions against Russia for stoking unrest in eastern Ukraine.

“Prices are elevated due to geopolitical risks,” Kilduff said.

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