* U.S. crude stockpiles grew more than expected in week to
Oct. 11 -EIA
* EIA data shows first draw at Cushing in more than three
By Jeanine Prezioso
NEW YORK, Oct 21 U.S. crude oil prices on Monday
tumbled below $100 a barrel for the first time since July, while
the discount versus European Brent hit its widest in six months
as diminished Midwest inventories began to grow.
Seasonal refinery maintenance and shifting pipeline flows
around the key Cushing, Oklahoma, oil hub have helped reverse a
months-long decline in stockpiles, dramatically shifting the oil
market's structure over the past two weeks.
Now, instead of a squeeze on supplies, traders are betting
on a near-term surplus of inventories, at least until
ramped-down refineries begin to rev up operations again. Delayed
U.S. government data for the week to Oct. 11 confirmed the first
decline in Cushing stocks in 14 weeks, while industry data
suggested the drawdown had continued since then.
"That crude build stood out," said Gene McGillian, analyst
with Tradition Energy in Stamford, Connecticut. "After last
week's API data there are signs that we have strong production
levels and ample supplies."
The December premium for Brent crude to U.S. futures, the
Brent/WTI spread, ballooned out by $1.30 to more than $10 a
barrel to the widest since April. The December WTI contract also
fell to a discount versus January, a structure known as
contango, signalling a near-term excess of oil.
U.S. oil futures for November delivery, which expire
at the end of trade on Tuesday, fell $1.59 per barrel to settle
at $99.22 a barrel. Brent crude futures for December delivery
fell just 30 cents to close at $109.64 a barrel.
U.S. oil for December delivery fell $1.43 to settle
at $99.68 a barrel. The Dec/Jan spread dropped 25
cents to end at -13 cents, flipping the second-month spread into
contango for the first time since June.
Data from the U.S. Energy Information Administration for the
week to Oct. 11, which was delayed until Monday by the
government shutdown, showed a 4 million barrel build in domestic
stockpiles for the week. It also showed Cushing stocks rose by
366,000 barrels after 14 weeks of decline.
Traders said Genscape on early Monday reported inventories
at Cushing declined slightly between Tuesday and Friday last
week, by 135,000 barrels.
Many analysts were already anticipating the end of the
restocking phase, which they believed would be short-lived as
refineries and pipelines return from maintenance.
"Over the course of the next few weeks you expect to see
Cushing draw again," said Amrita Sen, a chief analyst at
consultant Energy Aspects.
Losses in both oil contracts were limited by belief that the
U.S. Federal Reserve might delay curbing its monetary stimulus
program until next year, which is largely seen as supporting oil
Brent oil found support from lower global supply. Libyan
output has fallen sharply and Nigerian output has been
repeatedly hit by theft.
Investors face a deluge of data this week as U.S. government
agencies catch up after a 16-day shutdown. The U.S. Labor
Department will release its closely watched nonfarm payrolls
data for September at 8:30 a.m. EDT (1230 GMT) on Tuesday.