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WTI rises from two-month low on Cushing supply; Brent recovers

BEN SHARPLES and GRANT SMITH

NEW YORK (Bloomberg) -- West Texas Intermediate rose from the lowest price since May as crude stockpiles shrank in the U.S. Brent recovered from a three-month low as China’s economic growth exceeded forecasts.

Futures advanced as much as 0.8% in New York. U.S. crude inventories probably fell by 2.75 MMbbl last week, a Bloomberg News survey shows before government data today, July 16. Supplies at the storage hub in Cushing, Oklahoma, dropped by 944,000 bbl, the American Petroleum Institute was said to have reported yesterday. China’s gross domestic product expanded by 7.5% in the second quarter from a year ago, according to the statistics bureau in Beijing.

“WTI is being supported by the stockpile draw-down of nearly 1 MMbbl at Cushing reported by the API yesterday,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. “The Chinese economic data for June was supportive, with the stimulus measures bearing some fruit and allaying concerns of a sharp slowdown in the economy.”

WTI for August delivery climbed as much as 83 cents to $100.79 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.73 at 11:42 a.m. London time. It slid to $99.96 yesterday, the lowest close since May 6. The volume of all futures traded was 13% above the 100-day average for the time of day. Futures have advanced 2.4% this year.

Brent for August settlement, which expires today, was 18 cents higher at $106.20 a barrel on the London-based ICE Futures Europe exchange. The September contract gained 42 cents to $107.30. The European benchmark crude dropped to $106.02 yesterday, the lowest settlement since April 7. It was at a premium of $5.44 to WTI, compared with $6.06 yesterday.

Chinese Economy

China’s GDP growth accelerated for the first time in three quarters after the government expedited spending and freed up more money for loans to counter a property slump. A median gain of 7.4% was projected in a separate Bloomberg survey of economists. Factory output also beat estimates.

“The numbers are the latest in a series which confirm stabilization and that the Chinese authorities are controlling the deleveraging at this stage,” Guy Wolf, global head of market analytics at Marex Spectron Group in London, said by email. “Chinese commodities demand is no better than stable, but that is a long way above expectations three months ago.”

The Asian nation will account for about 11% of global oil demand this year, compared with 21% for the U.S., according to the International Energy Agency in Paris.

Oil Stockpiles

WTI’s decline below $100 a barrel yesterday was excessive and further losses may be unsustainable, a chart indicator shows. The 14-day relative strength index closed below 30 for the first time since Nov. 5, a level that typically signals the market is oversold. Today’s reading is about 33.1.

U.S. crude inventories probably fell to 379.8 MMbbl in the week ended July 11, according to the median prediction of 10 analysts surveyed before today’s report from the Energy Information Administration. Gasoline inventories are forecast to have increased by 950,000 bbl last week, the survey shows. Distillate supplies, including heating oil and diesel, probably expanded by 2 MMbbl.

The government requires that reports be filed with the EIA, the Energy Department’s statistical arm. The API, an industry group based in Washington, collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines.

07/16/2014

 

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