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West Texas Intermediate fell for the second time in three days after data showed US crude stockpiles rose the most in four weeks, and a government order prevented the restart of a pipeline to the Texas Gulf Coast.
Futures slid as much as 0.7 per cent in New York. Crude inventories climbed 4.7 million barrels last week, the most since March 1, according to the American Petroleum Institute (API). Government data today may show supplies rose 2.1 million barrels. Exxon Mobil Corp's Pegasus pipeline, which runs from the Midwest to Texas refineries, will stay shut until regulators are satisfied with repairs. The main rebel group in Nigeria's oil-rich Niger River delta said it will resume assaults.
"Crude builds are normal at a time of high seasonal refinery maintenance," said Amrita Sen, chief oil market strategist at Energy Aspects Ltd, a research company in London whose forecast for oil in the first quarter was within 0.6 per cent of actual price levels. "The longer the Pegasus outage lasts, the more it is likely to weigh on WTI."
WTI for May delivery declined as much as 68 cents to $96.51 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.62 at 1.46 p.m. London time.
Brent for May settlement retreated for a second day on the London-based ICE Futures Europe exchange, dropping 99 cents to $109.70 a barrel. The contract decreased 0.4 per cent to $110.69 yesterday. Brent, the European benchmark crude grade, was at a premium of $13.08 to WTI, versus $13.50 yesterday. The volume of all WTI futures traded was 27 per cent below the 100-day average, while Brent trading was 22 per cent above.
Demand for talks
Brent declined even as the Movement for the Emancipation of the Niger Delta (MEND) announced it would start to carry out "a plague of attacks" from April 5 against Africa's biggest petroleum industry, according to an e-mailed statement by spokesman Jomo Gbomo. MEND wants Henry Okah, its suspected leader, released from prison in South Africa.
"The attacks will be sustained until an unreserved apology is offered to MEND and the Nigerian government shows their willingness to dialogue," Gbomo said.
An explosion hit Libya's Zueitina Oil Co's crude and condensate pipelines yesterday at 10 p.m., state-run National Oil Corp said on its website, citing company official Abul Qasim Shanger.
Libyan Plans
Libya, holder of Africa's biggest oil reserves, expects production to increase to 1.7 million barrels a day this year from 1.5 million a day currently, Deputy Oil Minister Omar Shakmak said today at a conference in Dubai.
US crude stockpiles probably climbed to 388 million barrels last week, the highest level in more than 22 years, as production surged and refineries completed annual maintenance programs, a Bloomberg News survey showed before the report from the Energy Information Administration (EIA).
The EIA will probably say gasoline inventories dropped 1 million barrels, according to the median estimate of 12 analysts surveyed by Bloomberg. Distillate inventories are projected to fall 1.1 million barrels. The API said yesterday gasoline stockpiles fell 5 million barrels last week, while supplies of heating oil and diesel slid 1.9 million barrels.
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 EIA, the Energy Department's statistics unit, for its weekly survey, scheduled for release at 10.30 a.m. in Washington.
Technical Indicators
WTI declined after trading higher than its upper Bollinger Band the past three days without settling above it, according to data compiled by Bloomberg. The indicator, representing technical resistance, is around $97.43 a barrel today. Crude's 30-day stochastic oscillators are also above 70 for the first time in six weeks, signaling further gains after last month's rally aren't sustainable.
Exxon's 96,000 barrel-a-day Pegasus pipeline was closed after a leak was discovered in Arkansas on March 29. The line runs 940 miles (1,512 kilometres) from Patoka, Illinois, to Nederland, Texas, and serves refineries around Port Arthur and Beaumont in eastern Texas.
The US Pipeline and Hazardous Materials Safety Administration issued the order yesterday, citing hazards to "life, property and the environment" if the pipeline were to continue operating without corrective measures. The line leaked 3,500 to 5,000 barrels of oil.
"We are studying the order and don't have anything further" to say, Alan Jeffers, a spokesman at Exxon's headquarters in Irving, Texas, said yesterday in a phone interview. "Our current plan is to develop the excavation plan, get that to PHMSA and have them evaluate that."
