Crude Ends Modestly Higher After 6-Day, 8.8% Fall
U.S. crude oil futures settled modestly higher Thursday, snapping a six-day losing streak that slashed prices by 8.8% to three-month lows.
Traders said the gain doesn't upset the recent trend in the nervous and oversupplied market, with little sign that crude soon will add back the $9 a barrel shed this month. Prices failed to extend losses below Wednesday's low of $95.17 or top $98, a would-be milestone for a further recovery.
Prices haven't topped $100 a barrel since a week ago, when Abdulla Salem El-Badri, the secretary general of the Organization of Petroleum Exporting Countries, called oil prices too high and said they threaten to cause demand destruction. OPEC will keep output high, aiming to knock international prices below the century level, he said.
OPEC said in its monthly oil report Thursday that April output, estimated by independent sources, rose by 320,000 barrels a day from March. That's eight times more than the 40,000 barrels a day OPEC increased its global demand forecast by in the same report.
"That's not an argument for higher prices," says Tim Evans, analyst Citi Futures Perspective.
OPEC said it expects global demand to rise 900,000 barrels a day, to about 88.7 million barrels a day, a figure that is in line with the latest projection from the U.S. Energy Information Administration.
Light, sweet crude oil for June delivery on the New York Mercantile Exchange settled 27 cents higher, at $97.08 a barrel.
ICE June North Sea Brent crude settled 47 cents lower, at $112.73 a barrel, matching Tuesday's price, which was the lowest since Feb. 2.
Traders said the pause in the downfall came amid light volume and position adjustments by commodity funds, which normally roll their holdings into the forward contracts around this time of the month. Nymex June crude's discount to July narrowed by 1 cent to 33 cents a barrel, the slimmest spread since Feb. 16. At the May crude expiration on April 20, the front-month discount to the second month was 83 cents a barrel.
Crude prices have been battered in recent days as U.S. crude inventories have risen to the highest level since August 1990. The EIA forecasts that refiners, returning from seasonal maintenance, will boost processing rates to 15.1 million barrels a day this month, more than 300,000 barrels a day above current levels. But crude stocks are expected to end May at their highest level for the month since 1981.
The market is still facing the "same lousy fundamentals that have been hiding in plain sight for some time," said Evans. "People don't know what to do: Buy the dip or dump long positions?"
Reformulated gasoline blendstock futures for June delivery settled 1.39 cents lower, at $301.02 a gallon. June heating oil settled 1.57 cents lower, at $2.9834 a gallon.
Copyright (c) 2013 Dow Jones & Company, Inc.
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