Brent Falls to 13-Month Low Amid Signs China Is Slowing

03:58 PM @ Wednesday - 13 August, 2014
Brent crude fell to its lowest intraday level in 13 months after slower industrial output and a plunge in new credit indicated the recovery is at risk in China, the second-biggest oil user. West Texas Intermediate was steady.

Futures slipped as much as 0.6 percent in London. China’s broadest measure of new credit plunged to the lowest since the global financial crisis, while the National Bureau of Statistics in Beijing said growth in factory production slowed to 9 percent in July from 9.2 percent in June. U.S. crude inventories rose last week by 229,000 barrels, the American Petroleum Institute was said to report yesterday. Government data today may show supplies shrank, according to a Bloomberg News survey.

“The supply situation is adequate,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “Output from the U.S. is taking care of any growth in their market, and the rest of the world is being serviced by OPEC.”

Brent for September settlement declined as much as 65 cents to $102.37 a barrel on the London-based ICE Futures Europe exchange, the lowest since July 1, 2013. It traded for $102.82 at 8:58 a.m. London time, when the volume of all futures traded was about 49 percent above the 100-day average. The European benchmark crude was at a premium of $5.38 a barrel to WTI on ICE, after closing at $5.65 yesterday.

WTI for September delivery was 7 cents higher at $97.44 a barrel in electronic trading on the New York Mercantile Exchange, having earlier dropped as much as 31 cents to $97.06 a barrel. The contract fell 0.7 percent to $97.37 a barrel yesterday, the lowest close since Aug. 7.

China Lending

Aggregate financing in China was 273.1 billion yuan ($44 billion) in July, the central bank said today in Beijing, contrasting with a Bloomberg LP gauge that showed China loosened monetary conditions last quarter at the fastest pace in almost two years.

WTI was little changed before weekly supply and demand data from the Energy Information Administration, the statistical unit of the Energy Department.

U.S. gasoline supplies rose by 2.7 million barrels during the week ended Aug. 8, the API reported, according to a person familiar with the data. The EIA today will probably show stockpiles shrank by 1.5 million barrels, the median estimate of 10 analysts surveyed by Bloomberg shows.

Crude Inventories

Crude inventories dropped by 2.05 million barrels to 363.6 million, according to the survey. That would be a seventh week of declines, the most since January.

The EIA cut its 2014 price forecast for WTI after the U.S. reached its highest monthly production in 27 years last month. Futures will average $100.45 a barrel this year versus the July projection of $100.98, the Energy Department’s statistical arm said yesterday in its monthly Short-Term Energy Outlook. Oil output was 8.5 million barrels a day in July, the most since April 1987, the EIA said.

Brent slid to the lowest in 13 months yesterday after the IEA said demand growth eased to its weakest since 2012 last quarter, while crude production in the Organization of Petroleum Exporting Countries increased.

OPEC crude output increased by 300,000 barrels a day to 30.44 million in July, a five-month high, amid gains from Saudi Arabia, the IEA said in its monthly oil market report.

Libya exported the first oil cargo from Ras Lanuf port since it was closed by rebels a year ago. A crude tanker left Ras Lanuf port yesterday, Libya National Oil Co.’s spokesman, Mohamed Al Elharari, said. The vessel, carrying 680,000 barrels of oil, was bound for Italy, according to Ibrahim Al-Awami, the oil ministry’s director of measurement.
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