April 25 (Bloomberg) -- West Texas Intermediate crude fell to the lowest level in more than two weeks, widening the discount to Brent, as U.S. equities declined and crude stockpiles expanded.
Prices dropped as much as 1.4 percent, following the Standard & Poor’s 500 Index amid disappointing corporate earnings. WTI headed for the first weekly loss in three as inventories grew in 13 of the past 14 weeks to reach the highest level since government weekly data started in 1982. Brent neared $110 on concern the Ukraine crisis may disrupt global supplies.
“I don’t see anything physical or fundamental that’s bullish for oil,” Kyle Cooper, director of commodities research at IAF Advisors in Houston, said today in a telephone interview. “Equities are falling. The petroleum market is driven by short- term money flows. We probably will test $100.”
WTI for June delivery fell $1.05, or 1 percent, to $100.89 a barrel at 10:31 a.m. on the New York Mercantile Exchange. The futures are down 3.4 percent this week. The volume of all futures traded was 12 percent above the 100-day average for the time of day.
Brent for June settlement slid 50 cents, or 0.5 percent, to $109.83 a barrel on the London-based ICE Futures Europe exchange. WTI’s discount to the European benchmark crude expanded to $8.94 a barrel from $8.39 yesterday.
The S&P Index dropped as much as 0.6 percent as results from Amazon.com Inc. to Visa Inc. disappointed. Eight of the 10 main S&P 500 industries retreated.
“The stock market being lower is adding additional pressure to oil,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Oil is refocusing on the high supplies in the U.S.”
WTI surged to $104.99 on April 16, the highest level since March 3. Prices have since dropped about $4.
“We had a big run up and prices got pretty lofty,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “I didn’t see any follow-up momentum.”
Crude stockpiles grew 3.52 million barrels in the seven days ended April 18 to 397.7 million, the Energy Information Administration, the Energy Department’s statistical arm, reported on April 23. It’s the highest level since the EIA weekly data started in August 1982. In monthly data, supplies were higher in May 1931. U.S. crude production increased to 8.36 million barrels a day, the most since 1988.
“WTI is retreating because of the massive inventories in the U.S.,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There is no increase in fuel demand and the fundamental picture is weak. The Brent-WTI spread is widening due to Ukraine.”
Total oil demand dropped 361,000 barrels a day last week to 18.1 million, the lowest level since June 7.
“A lot of people are anticipating more big builds in crude inventories,” Carl Larry, president of Oil Outlooks & Opinions LLC in Houston, said today by telephone. “Ukraine still seems to be a hot topic and could get even more tense over the weekend. That’ll help Brent.”
Brent rose this week on signs of the escalating crisis in Ukraine. President Barack Obama was set to discuss a possible expansion of sanctions with European leaders after U.S. Secretary of State John Kerry said Russia is running out of time to ease tension.
Obama, who’s visiting South Korea, planned a conference call with leaders including German Chancellor Angela Merkel. In Washington yesterday, Kerryaccused Russian President Vladimir Putin’s government, which began new military exercises on Ukraine’s border, of using the “barrel of a gun and the force of a mob” to impose its will on its neighbor.