Futures in New York fell as much as 1.6 percent as the profit from refining crude into gasoline tumbled. Billionaire investor Carl Icahn and the leading U.S. biofuel trade group presented to the Trump administration a plan to revamp a law requiring refiners either blend petroleum-based fuels with ethanol and biodiesel, or buy blending credits called RINs, people familiar with the proposal said. OPEC output rose by 55,000 barrels a day in February, Vienna-based consultant JBC Energy GmbH said. This month prices have been locked in their narrowest range in 13 years.
As the Organization of Petroleum Exporting Countries and 11 other nations reduce supply to end a three-year glut, U.S. drillers are ramping up operations, sowing speculation they could fill the gap left by OPEC’s cuts. That’s subduing price swings, sending the Chicago Board Options Exchange Crude Oil Volatility Index on Monday to the lowest since October 2014.
“I think crude oil is just following the gasoline market lower on the expected RINS executive order,” said Clayton Rogers, an energy derivative broker at SCS Commodities Corp. in New Jersey.
West Texas Intermediate for April delivery fell 82 cents, or 1.5 percent, to $53.23 a barrel at 12:25 p.m. on the New York Mercantile Exchange. Prices are up 0.8 percent this month. Total volume traded was about 5 percent above the 100-day average. WTI futures have bounced between $51.22 and $54.94 a barrel in February, the tightest range since August 2003.
March gasoline futures, which expires Tuesday, dropped 3.5 percent to $1.479 a gallon on the Nymex. April gasoline was down 3.3 percent, pushing the April crack spread, a rough measure of the profit from refining crude into the fuel, down $1.54 to $17.561 a barrel.
Brent for April settlement, which expires Tuesday, declined 70 cents to $55.23 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $2 premium to WTI. The more-active May contract slipped 76 cents to $55.66.
U.S. crude stockpiles probably rose by 3 million barrels last week from the highest level in weekly data going back to 1982, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
“The market has been trying to break out to the upside and has yet to get the final impetus,” Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut, said by telephone. “That’s probably due to U.S. inventories that are at three-decade highs, U.S. production rising above 9 million barrels a day again and the huge global supply overhang.”
- EOG Resources Inc. boosted its drilling budget by 44 percent and said the rebound in crude prices isn’t raising equipment and manpower costs in the oil fields.
- BP Plc said it will need a crude price of about $40 a barrel in 2021 to cover spending and dividends, down from $60 this year, as Chief Executive Officer Bob Dudley seeks to reassure investors on the oil major’s growth outlook and finances.
- OPEC is delivering more than 90 percent of its agreed curbs, Secretary General Mohammad Barkindo said in Abuja, Nigeria.
- Russia, acting in tandem with the group, deepened its output cuts in February by 6,600 barrels a day, Interfax reported, citing a person it didn’t identify.