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WTI Crude Falls for Second Day on U.S. Supplies; Brent Declines

May 28 (Bloomberg) -- West Texas Intermediate crude fell for a second day on speculation that U.S. supplies rose last week. Brent slipped.

WTI dropped as much as 0.7 percent. U.S. crude inventories may have increased 500,000 barrels to near the highest level for this time of year, according to a Bloomberg survey of 10 analysts before a government report tomorrow. Stockpiles at Cushing, Oklahoma, may have climbed from a five-year low, two of the analysts said.

“When you step back and consider the fundamental picture, we still have a lot of supplies,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “If we don’t continue to see tightening fundamentals, at these kinds of levels the market really has a hard time to attract new investment.”

WTI for July delivery slid 54 cents, or 0.5 percent, to $103.57 a barrel at 9:49 a.m. on the New York Mercantile Exchange. The volume of all futures was 26 percent below the 100-day average for the time of day.

Brent for July settlement fell 49 cents, or 0.5 percent, to $109.53 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures was about 28 percent below the 100-day average. WTI was at a discount of $5.96 to Brent. The spread closed at $5.91 yesterday, the narrowest in six weeks.

Rising Supplies

U.S. crude supplies may have increased to 391.8 million barrels in the seven days ended May 23, according to the Bloomberg survey before an Energy Information Administration report tomorrow. Stockpiles advanced to a record 399.4 million in the week ended April 25, according to the EIA, the Energy Department’s statistical arm. Petroleum consumption slipped 3 percent to 18.9 million barrels in the week ended May 16.

“People are not ready to invest in $104 oil until they see higher demand,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “We are not seeing a lot of volume in the oil market. Interest in oil is weak.”

Trading has averaged 512,000 contracts a day in May, the lowest level since December. The EIA will release last week’s inventory data at 11 a.m. tomorrow, a day later than usual because of the Memorial Day holiday.

Inventories at Cushing, Oklahoma, the delivery point for WTI futures, may have increased, according to Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC and Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

Cushing Stockpiles

Cushing supplies have decreased since January as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from the hub.

Brent fell less than WTI as Ukraine’s government said it will press on with military operations against pro-Russian rebels after its forces retook Donetsk airport and inflicted “significant” losses on the insurgency.

In Libya, the disruption of crude exports worsened as rebels shut down a recently reopened oil port after protesting over the appointment of the country’s new prime minister. Petroleum Facilities Guards members aligned with federalist rebels stopped loadings at the Hariga oil port in eastern Libya, Oil Ministry Director of Measurement Ibrahim Al Awami said by telephone from Tripoli.

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