(For Bloomberg fair value curves, see CFVL <GO>)
Nov. 1 (Bloomberg) -- West Texas Intermediate headed for its longest run of weekly declines since June 2012 as an increase in Chinese manufacturing failed to counter signs that oil markets are well supplied.
Futures have lost 1.7 percent this week in New York for a fourth weekly drop. Prices will probably extend losses next week because of rising crude stockpiles in the U.S., the world’s largest oil consumer, according to a Bloomberg survey. China’s Purchasing Manager’s Index was 51.4 in October, the highest in 18 months and more than the median estimate of 51.2 in a Bloomberg News survey of economists. A separate manufacturing indicator also climbed.
“A sharp slowdown in refiner demand and continued strong inventory builds” in the U.S. have weighed on prices, said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “We’ve seen a bit of a recovery in China, but this quarter may be the best for a while.”
WTI for December delivery was at $96.20 a barrel in electronic trading on the New York Mercantile Exchange, down 18 cents, at 11:18 a.m. London time. The U.S. benchmark fell to $96.38 yesterday, the lowest since June 26, and lost 5.8 percent in October, the most in a year. The volume of all futures traded was about 60 percent below the 100-day average.
Brent for December settlement was down 25 cents at $108.594 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $12.39 to WTI futures, from $12.46 yesterday.
Economic data from China released last month showed the first acceleration in growth in three quarters, with gross domestic product gaining 7.8 percent from a year earlier. China will account for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., according to forecasts from the International Energy Agency.
The October PMI released today by the National Bureau of Statistics and China Federation of Logistics and Purchasing is higher than the level of 51.1 recorded for September. A separate manufacturing gauge from HSBC Holdings Plc and Markit Economics increased to 50.9 from 50.2, matching a preliminary figure. Readings above 50 signal expansion.
Twenty of 29 analysts and traders, or 69 percent, in a separate Bloomberg survey predicted WTI futures will decrease through Nov. 8. Seven respondents, or 24 percent, said there will be an advance and two projected little change.
U.S. crude inventories climbed by 4.1 million barrels to 383.9 million last week, the highest level since June, data from the Energy Information Administration showed on Oct. 30. That was the sixth week of gains.
“Rising stockpiles in the U.S. could keep downward pressure on prices in the short term, but these inventories will decline in the weeks ahead as refineries return to production from autumn maintenance,” said Gordon Kwan, the regional head of oil and gas research at Nomura Holdings Inc. in Hong Kong.
WTI’s slide may slow as a technical indicator shows futures may be falling too quickly to sustain further losses. The 14-day relative strength index dropped below 33 yesterday, according to data compiled by Bloomberg. A reading of less than 30 typically signals a market is oversold. Crude rebounded on Oct. 23 when the RSI sank to 30.2, the lowest since April.
OPEC’s crude production increased in October after the completion of maintenance work in Iraq, a separate Bloomberg survey showed yesterday. The 12-member Organization of Petroleum Exporting Countries boosted daily output by 38,000 barrels to an average of 30.621 million barrels, up from a revised 30.583 million in September, according to the survey of oil companies, producers and analysts.
Libya was producing 350,000 to 400,000 barrels a day, Ibrahim Al Awami, the oil ministry’s head of measurement and inspection, said by phone yesterday, or about 100,000 barrels a day more than earlier this week. The nation reopened a port, Hariga, though several others remain shut, preventing exports.
U.S. imports of Nigerian crude averaged 134,000 barrels a day in August, the lowest since February 1985, EIA data showed this week. West Africa’s biggest oil exports to Asia in almost two years are threatened by competing Russian supply and new refineries capable of processing cheaper crude from the Middle East.
--With assistance from Ramsey Al-Rikabi in Singapore and Ben Sharples in Melbourne. Editors: Stephen Voss, Rachel Graham