West Texas Intermediate crude declined from a five-week high on speculation that U.S. inventories are sufficient to meet increasing fuel demand. Brent slipped below $110 after elections in Ukraine.
Futures fell as much as 0.7 percent in New York. U.S. crude supplies, which rose in April to the highest level since the government began publishing weekly data in 1982, are near a record for the time of year.
Stockpiles at Cushing, Okla., the delivery point for WTI, dropped to a six-year low in the week ended May 16. Ukraine’s President-elect Petro Poroshenko vowed to wipe out the separatists.
“There are ample crude supplies here in the U.S.,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The picture has been muddied because of tightness at Cushing. WTI will be under pressure because there is so much supply elsewhere.”
WTI for July delivery fell 27 cents, or 0.3 percent, to $104.08 a barrel at 10:49 a.m. on the New York Mercantile Exchange.
Futures touched $104.50 for a second day, the highest intraday level since April 21. The volume of all futures traded was 12 percent below the 100-day average.
There was no floor trading in New York on Monday, because of the U.S. Memorial Day holiday and electronic transactions will be booked Tuesday for settlement purposes.
Brent for July settlement decreased 11 cents to $110.21 a barrel on the London-based ICE Futures Europe exchange.
Volume was 13 percent lower than the 100-day average. The range was $109.75 to $110.80. The North Sea crude traded at a $6.13 premium to WTI, compared with $6.19 at the close on May 23.
“We had our pre-Memorial Day run-up and a lot of that exuberance has left the market,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pa. “We’ve gotten close to areas that the bulls have found it difficult to break through, $105 for WTI and $111 for Brent. It looks like we’re now set for a correction.”
WTI reached $105.22 on March 3, the 2014 intraday high, and $104.99 in April. Brent touched $111.04 on May 22, the highest intraday level since March 4.
U.S. crude inventories dropped 7.23 million barrels to 391.3 million in the seven days ended May 16, according to the Energy Information Administration. Stockpiles rose to a record 399.4 million in the week ended April 25.
The EIA will release last week’s inventory data on May 29 at 11 a.m. in Washington, a day later than usual because of the Memorial Day holiday.
“There’s plenty of oil around,” said Michael Lynch, the president of Strategic Energy & Economic Research in Winchester, Mass. “There’s a feeling that all of the shut-ins and disruptions that are going to happen have taken place. It will take a major disruption to send prices to new highs.”
Ukraine elected a new president amid separatist violence that erupted after Russia annexed the Black Sea peninsula of Crimea in March.
A pro-Russian movement has captured large swathes of the Donetsk and Luhansk regions. Ukraine is a conduit for Russian oil and natural gas supplies to Europe.