(For Bloomberg fair value curves, see CFVL <GO>)
March 21 (Bloomberg) -- West Texas Intermediate oil swung between gains and losses after the biggest advance in two weeks as U.S. crude stockpiles unexpectedly fell and manufacturing accelerated in China.
Futures fluctuated in New York after rising 0.9 percent yesterday. China’s manufacturing is expanding at a faster pace than forecast this month as production and orders increase, a private survey showed. U.S. crude inventories declined by 1.3 million barrels last week, the first drop in two months, an Energy Department report showed. Supplies were forecast to climb 2 million barrels in a Bloomberg News survey.
The China manufacturing data “should reassure the market that China is not slipping back into a recession, boding well for an oil-price rebound,” said Gordon Kwan, the head of energy research at Mirae Asset Securities Ltd. in Hong Kong.
WTI for May delivery was at $93.27 a barrel in electronic trading on the New York Mercantile Exchange, down 23 cents, at 1:16 p.m. Singapore time. The volume of all futures traded was 53 percent below the 100-day average. The April contract, which expired yesterday, closed 80 cents higher at $92.96.
Brent for May settlement on the London-based ICE Futures Europe exchange slid 4 cents to $108.68 a barrel. The volume of all futures traded was 41 percent below the 100-day average. The European benchmark grade was at a premium of $15.41 to WTI. The gap was $14.93 on March 19, the narrowest since July.
The preliminary reading of a Purchasing Managers’ Index for China was 51.7 in March, according to a statement from HSBC Holdings Plc and Markit Economics today. That’s higher than a 50.4 final reading for February and a 50.8 median estimate in a Bloomberg News survey of 11 economists. A reading above 50 indicates expansion. China is the world’s second-largest oil consumer after the U.S.
Crude stockpiles at Cushing, Oklahoma, the biggest U.S. storage hub and the delivery point for WTI contracts, shrank by 286,000 barrels last week to 49 million, according to the Energy Department report. It was a second weekly decrease and the lowest level since the week ended Dec. 14.
The data for total supplies may have been distorted by the West Coast, which registered the largest decline at 2.75 million barrels. The inventory change in the area is sometimes disregarded by traders because the region’s distribution system is isolated from the rest of the U.S., Tariq Zahir, a New York- based commodity fund manager at Tyche Capital Advisors, said yesterday. Excluding the West Coast, total U.S. stockpiles rose by 1.44 million barrels.
U.S. gasoline inventories slid by 1.5 million barrels last week, the government report showed. They were forecast to fall by 2 million, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate-fuel supplies, including heating oil and diesel, decreased by 672,000 barrels, compared with a projected fall of 1 million in the survey.
Tensions over Iran’s nuclear ambitions appear to be easing. Talks last month over the uranium-enrichment program that led to sanctions on the country’s oil exports marked a “turning point,” said Mohammad Khazaee, the Islamic Republic’s ambassador to the United Nations.
World powers meeting in Almaty, Kazakhstan, last month seemed “more realistic” about Iran’s position that it has a right to enrich uranium for peaceful use, Khazaee said in an interview March 18 at Bloomberg’s headquarters in New York. The U.S., the U.K., France, Germany, China and Russia proposed the easing of sanctions on Iran’s petrochemicals and gold trade in exchange for it ceasing production of medium-enriched uranium, according to officials involved in the talks.
Oil in New York may decline after failing to breach technical resistance yesterday along the middle Bollinger Band, data compiled by Bloomberg showed. Front-month futures have traded near this indicator, around $94.10 a barrel today, the past four days without settling above it. Sell orders tend to be clustered close to chart-resistance levels.
“A break above the $95-a-barrel area requires some pretty positive news because it is a reasonably significant resistance,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
--With assistance from Yee Kai Pin in Singapore. Editors: Mike Anderson, Christian Schmollinger