WTI Rises From Two-Month Low on Cushing Supply; Brent Recovers

Jul 16, 2014 8:38 am ET

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July 16 (Bloomberg) -- West Texas Intermediate rose from the lowest price since May as crude stockpiles shrank in the U.S. Brent recovered from a three-month low as China’s economic growth exceeded forecasts.

Futures advanced as much as 1 percent in New York. U.S. crude inventories probably fell by 2.75 million barrels last week, a Bloomberg News survey shows before government data today. Supplies at the storage hub in Cushing, Oklahoma, dropped by 944,000 barrels, the American Petroleum Institute was said to have reported yesterday. China’s gross domestic product expanded by 7.5 percent in the second quarter from a year ago, according to the statistics bureau in Beijing.

“WTI is being supported by the stockpile draw-down of nearly 1 million barrels at Cushing reported by the API yesterday,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. “The Chinese economic data for June was supportive, with the stimulus measures bearing some fruit and allaying concerns of a sharp slowdown in the economy.”

WTI for August delivery climbed as much as $1.04 to $101 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.82 at 1:11 p.m. London time. It slid to $99.96 yesterday, the lowest close since May 6. The volume of all futures traded was 31 percent above the 100-day average for the time of day. Futures have advanced 2.4 percent this year.

Brent for August settlement, which expires today, was 29 cents higher at $106.31 a barrel on the London-based ICE Futures Europe exchange. The September contract gained 64 cents to $107.52. The European benchmark crude dropped to $106.02 yesterday, the lowest settlement since April 7. It was at a premium of $5.51 to WTI, compared with $6.06 yesterday.

Chinese Economy

China’s GDP growth accelerated for the first time in three quarters after the government expedited spending and freed up more money for loans to counter a property slump. A median gain of 7.4 percent was projected in a separate Bloomberg survey of economists. Factory output also beat estimates.

“The numbers are the latest in a series which confirm stabilization and that the Chinese authorities are controlling the de-leveraging at this stage,” Guy Wolf, global head of market analytics at Marex Spectron Group in London, said by e- mail. “Chinese commodities demand is no better than stable, but that is a long way above expectations three months ago.”

The Asian nation will account for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., according to the International Energy Agency in Paris.

Oil Stockpiles

WTI’s decline below $100 a barrel yesterday was excessive and further losses may be unsustainable, a chart indicator shows. The 14-day relative strength index closed below 30 for the first time since Nov. 5, a level that typically signals the market is oversold. Today’s reading is about 33.1.

U.S. crude inventories probably fell to 379.8 million barrels in the week ended July 11, according to the median prediction of 10 analysts surveyed before today’s report from the Energy Information Administration. Gasoline inventories are forecast to have increased by 950,000 barrels last week, the survey shows. Distillate supplies, including heating oil and diesel, probably expanded by 2 million barrels.

The government requires that reports be filed with the EIA, the Energy Department’s statistical arm. The API, an industry group based in Washington, collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines.

--With assistance from Ben Sharples in Melbourne.