(For Bloomberg fair value curves, see CFVL <GO>)
April 1 (Bloomberg) -- West Texas Intermediate fell for a second day amid estimates that U.S. crude supplies expanded for an 11th week. Brent slipped as maintenance at a North Sea export terminal and Chinese economic data spurred speculation Asian demand will slide.
Futures dropped as much as 0.6 percent in New York after losing 1 percent in March, the most in four months. China’s manufacturing indexes released today pointed to a slowdown in the world’s second-largest oil consumer. U.S. crude stockpiles probably rose by 2.5 million barrels last week to the highest level since November, according to a Bloomberg News survey before government data tomorrow.
“Oil demand growth has been dragged down by weakness in China, where the authorities are trying desperately to balance controlling pollution and credit bubbles with maintaining steady economic growth,” Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a consulting company in London, said in a report. “Crude demand has reached its seasonal low point.”
WTI for May delivery declined as much as 57 cents to $101.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.23 at 12:17 p.m. London time. The contract slid 9 cents to $101.58 yesterday. The volume of all futures traded was 32 percent below the 100-day average for the time of day. Prices have climbed 2.9 percent this year.
Brent for May settlement slid 25 cents to $107.51 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.28 to WTI on ICE. The spread narrowed for a fourth day yesterday to close at $6.18.
China’s purchasing managers’ index fell to 48 in March, the lowest level since July, HSBC Holdings Plc and Markit Economics said today. Readings below 50 signal contraction. A separate measure from the government, with a bigger sample size, was at 50.3, compared with 50.2 in February.
“Both indexes show weakness in the Chinese economy,” Victor Shum, a vice president at IHS Energy Insight, a consultant in Singapore, said by phone. “That should put some downward pressure on oil. The official Chinese index has a number above 50, which is still an expansion, but it’s not really a noticeable improvement from last month.”
The Asian nation, the world’s second-largest economy, will account for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., forecasts from the International Energy Agency in Paris show.
U.S. crude stockpiles probably increased to 385 million barrels in the week ended March 28, according to the median estimate of seven analysts surveyed by Bloomberg before tomorrow’s report from the Energy Information Administration.
“We’re certainly seeing elevated levels of crude inventories and part of it may be due to the seasonal factor, but the overall picture remains plentiful,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney.
Gasoline stockpiles probably shrank by 2 million barrels, the survey shows. Refinery units are typically shut for maintenance in late winter before restarting in the spring to meet summer demand for motor fuels. Distillate inventories, including heating oil and diesel, are projected to have slid by 300,000 barrels.
The EIA, the Energy Department’s statistical arm, is scheduled to release its weekly supply report tomorrow. The industry-funded American Petroleum Institute in Washington will publish its data today.
Brent retreated as maintenance at the Hound Point terminal in Scotland kept supplies within Europe. The work, inhibiting the loading of very large crude carriers bound for ports in Asia, has put “significant pressure” on the Brent market, according to Energy Aspects.
Geopolitical tensions eased as some Russian troops began withdrawing from the eastern border with Ukraine while diplomats from North Atlantic Treaty Organization countries prepared to meet in Brussels today.
WTI capped a 3.2 percent advance in the first quarter after the government in Moscow annexed Ukraine’s Crimea peninsula, citing a need to protect its own citizens and Russian-speaking Ukrainians. The U.S. and European Union have threatened to intensify sanctions on the military, energy and financial industries in Russia, the world’s biggest energy exporter.
OPEC’s crude output decreased in March, a Bloomberg survey of companies, producers and analysts show. Production by the 12- member Organization of Petroleum Exporting Countries slid by 117,000 barrels a day to an average 30.293 million, led by declines in Angola and Libya.
Deutsche Bank AG raised its forecast for Brent crude in 2014 to $106.50 a barrel from $97.50 amid stronger-than-expected demand in developed nations and disruptions in supply, according to an e-mailed report.
--With assistance from Ben Sharples in Melbourne and Winnie Zhu and Ramsey Al-Rikabi in Singapore.