Brent crude declined to the lowest level in more than three months as supply threats in Iraq abated. West Texas Intermediate crude traded at a two-month low before inventory data.
Brent dropped as much as 1.2 percent in London. Supplies from Iraq remain unaffected by an insurgency while Libya seeks to boost exports after two ports reopened. U.S. gasoline stockpiles probably increased to the highest since March and distillate supplies also rose, a Bloomberg News survey shows before an Energy Information Administration report tomorrow.
“For crude generally, what you are seeing is a correction from the highs of the Iraqi crisis as expectations around a possible supply disruption reversed course,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by e-mail.
Brent for August settlement dropped as much as $1.30 to $105.68 a barrel on the ICE Futures Europe exchange, the lowest since April 7, and was at $105.85 at 11:58 a.m. London time. The contract expires tomorrow. The more-active September futures were 79 cents lower at $106.92. The European benchmark crude traded at a premium of $5.54 to WTI, compared with $6.07 yesterday.
WTI for August delivery fell as much as 83 cents, or 0.8 percent, to $100.08 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since May 12. The volume of all futures traded was about 64 percent above the 100-day average for the time of day. Prices have advanced 1.9 percent this year.
The discount on front-month Brent contracts widened to more than $1 a barrel for the first time in four years. A discount, or contango, on immediate deliveries typically signifies that supplies are outpacing demand.
WTI has declined the past three weeks as oil supplies expanded at Cushing,Oklahoma, the delivery point for New York-traded futures. Crude inventories nationwide probably shrank by 2.5 million barrels to 380.1 million in the seven days ended July 11, according to the median estimate in the Bloomberg survey of nine analysts.
Distillate stockpiles, including heating oil and diesel, climbed by 2 million barrels last week, the survey shows before tomorrow’s report from the EIA, the Energy Department’s statistical arm. U.S. gasoline stockpiles probably increased by 900,000 barrels. The industry-funded American Petroleum Institute inWashington will publish separate data today.
Source: Bloomberg
