Oil traded near the lowest close in almost a week in New York after U.S. inventories surged and Western countries discussed tapping emergency reserves.

West Texas Intermediate futures were little changed after falling 1.8 percent yesterday as an Energy Department report showed crude supplies rose the most since July 2010. The U.S. proposed a release from strategic reserves, French Industry Minister Eric Besson said. A White House official said no decision has been made. There is “no rational reason” for prices at current levels and Saudi Arabia would like to see them fall, the nation’s Oil Minister Ali al-Naimi said.

 

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March 28 (Bloomberg) -- Diane Swonk, chief economist at Mesirow Financial Inc., and Tom McClellan, co-founder and editor of the McClellan Market Report, talk about energy prices and the U.S. economy. They speak with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

 

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March 28 (Bloomberg) -- Helima Croft, analyst at Barclays Capital, and Tom McClellan, co-founder and editor of the McClellan Market Report, talk about U.S. energy policy and the outlook for oil prices. They speak with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

 

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March 27 (Bloomberg) -- Kevin Book, managing director at ClearView Energy Partners LLC, talks about the outlook for oil prices and the U.S. Senate decision to consider legislation that would repeal oil-industry tax breaks. Book speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)

“We’ve had a weak demand scenario for some time in the U.S.,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “Any actual release of strategic reserves would probably take us below $100 a barrel for West Texas.”

Oil for May delivery was at $105.39 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 1:52 p.m. Sydney time. It slumped yesterday to $105.41, the lowest close since March 22. Prices are 6.7 percent higher this year, heading for a second quarterly gain.

Brent oil for May settlement was at $124.12 a barrel, down 4 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $18.73, compared with $18.75 yesterday, the widest gap in almost two weeks.

Technical Breach

Oil may extend losses in New York after settling below its middle Bollinger Band yesterday, signaling a breach of technical support, according to data compiled by Bloomberg. The lower Bollinger Band, representing the next support level, is around $103.45 a barrel today and coincides with a Fibonacci retracement indicator on the weekly chart. Buy orders tend to be clustered near technical-support levels.

U.S. crude stockpiles rose 7.1 million barrels last week to 353.4 million barrels, the highest level since August 26, the data from the Energy Department showed. They were forecast to gain by 2.6 million barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.

Gasoline inventories declined 3.54 million barrels to 223.4 million and supplies of distillate fuel, a category that includes heating oil and diesel, fell 711,000 barrels to 135.9 million, according to the Energy Department report.

Strategic Reserves

France is waiting for a report from the International Energy Agency on inventories before deciding on releasing fuel from strategic stockpiles, Budget Minister Valerie Pecresse said yesterday. The IEA, the energy adviser to 28 countries, coordinated the release of reserves last year after shipments from Libya were disrupted.

No decision has been made and no specific action has been proposed, Josh Earnest, deputy White House press secretary, said in Washington. The option “remains on the table,” he said.

Crude has gained this year because of concern that Western sanctions aimed at halting Iran’s nuclear program will disrupt Middle East supplies. Negotiations about the country’s nuclear program will resume next month, Iran’s Foreign Minister Ali Akbar Salehi told reporters in Tehran yesterday.

“It is the perceived potential shortage of oil keeping prices high, not the reality,” al-Naimi said yesterday in an editorial published in the Financial Times, echoing comments he made to reporters on March 20. “There is no lack of supply. There is no demand which cannot be met.”

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore atakwiatkowsk2@bloomberg.net

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