(For Bloomberg Fair Value curves, see: CFVL <GO>)
March 4 (Bloomberg) -- West Texas Intermediate traded near $90 a barrel, a level it has held above so far this year, after money managers cut bets on rising prices.
Futures were little changed in New York after sliding to a 10-week low on March 1. Net-long positions in WTI dropped 16 percent, according to weekly data from the Commodity Futures Trading Commission. Services industries in China expanded at the slowest pace in five months in February, a survey of purchasing managers showed yesterday.
“Oil is going to remain under pressure for a while yet,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who correctly predicted last month that prices were set to drop. “When prices were strong last month there was an influx of fresh speculative buying, and the opposite is happening now.”
WTI for April delivery fell as much as 59 cents to $90.09 a barrel in electronic trading on the New York Mercantile Exchange. It was at $90.80 at 1:13 p.m. London time. Prices declined 2.6 percent last week for a second weekly drop and are down 1.1 percent this year. WTI last traded at $90 on Dec. 31 and dipped to $90.04 in intraday trading March 1.
Brent for April settlement gained 27 cents to $110.67 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $19.87 to WTI futures, from $19.72 on March 1. The volume of all futures traded was 16 percent below the 100-day average for WTI and 36 percent higher for Brent.
Money managers’ net-long positions in WTI for the week ended Feb. 26 fell by 32,790 futures and options combined, the most since Dec. 11, to 175,211, the CFTC data showed March 1.
The same trend occurred for ICE Brent, with hedge funds and other money managers cutting bullish bets by the most in more than 18 months, to a net 159,816 lots, the London-based exchange reported today. The reduction of 30,855, or 16.2 percent, is the biggest in terms of the number of contracts since early August 2011, and in percentage terms the steepest decline since October.
In other energy markets, the same category of investors increased positions on natural gas by 21 percent to the largest for the time of year since 2010, CFTC data showed.
China’s non-manufacturing Purchasing Managers’ Index fell to 54.5 in February from 56.2 in January, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. The country accounted for 11 percent of the world’s oil consumption in 2011, according to BP Plc’s Statistical Review of World Energy. The U.S. used 21 percent.
“The gloss of the recovery has been tarnished,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “We can see continued weakness in the demand picture for crude.”
The Brent Pipeline System in the North Sea remained shut for a third day today, affecting flows of 90,000 barrels a day, after a hydrocarbon release at an oil platform on March 2, according to the operator Abu Dhabi National Energy Co., also known as Taqa. The pipeline normally carries about 10 percent of the U.K.’s oil output.
Crude output near the Libyan town of Zuwara stopped on March 2 after militias clashed, Oil Minister Abdulbari al-Arusi told Al Jazeera television.
Oil-production facilities weren’t damaged in fighting between the two factions, Walid Mohammed, director of public relations for the Ministry of Defense’s Petroleum Facility Guard, said by phone yesterday. Government troops secured the area and stopped the fighting, he said, adding he didn’t know when output would resume.
Eni SpA, Italy’s biggest oil company, halted gas shipments through the Greenstream pipeline linking Libya and Italy, a company spokesman said in an e-mail yesterday. Eni and Libya’s National Oil Co. are equal partners in Greenstream BV and the Mellitah Oil & Gas BV processing plant. The plant resumed operation, Libyan state radio reported today, without citing anyone.
WTI oil may rebound as a technical indicator shows further losses may be unsustainable. WTI’s 14-day relative strength index is at 30.1, the lowest since June 28, according to data compiled by Bloomberg. A reading below 30 signals prices have fallen too quickly and may change direction. Futures have technical support along the 200-day moving average, about $90.37 a barrel today. Buy orders tend to be clustered near chart- support levels.
Prices will remain “at or below the current range over the next few years,” Christof Ruehl, the chief economist at BP, told reporters today in Sydney.
--With assistance from Yee Kai Pin and Ann Koh in Singapore. Editors: Stephen Voss, Raj Rajendran