WTI Crude Falls to 2-Week Low Before Supply Data; Brent Steady

Jul 29, 2014 8:50 am ET

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July 29 (Bloomberg) -- West Texas Intermediate crude declined to the lowest level in almost two weeks before data on fuel supplies and economic strength in the U.S., the world’s biggest oil consumer. Brent was steady in London.

Futures dropped as much as 1 percent in New York. Gasoline stockpiles probably expanded to the highest level since March, a Bloomberg News survey showed before a report from the Energy Information Administration tomorrow. Government data on second- quarter gross domestic product and monthly payrolls are also scheduled this week. The U.S. and European Union may move as soon as today to impose tougher sanctions against President Vladimir Putin’s government over Ukraine.

“The outlook for crude demand is beginning to play a bigger role in the market” and so this week’s economic data will be “instrumental,” Jens Pedersen, an analyst at Danske Bank A/S in Copenhagen, said by e-mail. “The market is awaiting clarification on new EU sanctions against Russia.”

WTI for September delivery slid as much as $1 to $100.67 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since July 16, and was at $100.72 at 1:46 p.m. London time. The volume of all futures traded was about 74 percent above the 100-day average for the time of day. Prices have dropped 4.4 percent in July.

Key Sectors

Brent for September settlement was 2 cents lower at $107.55 a barrel on the London-based ICE Futures Europe exchange. Prices are down 4.3 percent in July. The European benchmark crude traded at a premium of $6.80 to WTI, the widest based on closing prices since July 4.

New sanctions are aimed at “key sectors” of Russia’s economy -- finance, defense and energy -- and are being imposed in the face of Putin “doubling down” in support of separatists battling the government of Ukraine, U.S. Deputy National Security Adviser Tony Blinken said yesterday.

“The only thing sure about the relationship between the U.S., EU and Russia is that we are still in an escalation phase and we don’t know what the end point will be,” Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland, said in a report. “The two sides are increasingly acting as if in full return to cold war.”

U.S. gasoline stockpiles probably expanded by 1 million barrels to 218.9 million last week, according to the Bloomberg News survey before tomorrow’s Energy Information Administration report.

Stockpile Drop

Crude inventories probably decreased by 1 million barrels in the week ended July 25, according to the median estimate in the Bloomberg survey of seven analysts. The country’s peak summer driving season typically starts on Memorial Day, which came on May 26 this year, through to Labor Day on Sept. 1.

Distillate stockpiles, including heating oil and diesel, are forecast to have increased by 1.5 million barrels, the survey shows before data from the EIA, the Energy Department’s statistical arm. The industry-funded American Petroleum Institute in Washington is due to publish a separate supply report today.

WTI has technical support along its 200-day moving average, according to data compiled by Bloomberg. Futures rebounded on July 15 after reaching this indicator, at about $99.90 a barrel. Buy orders tend to be clustered around chart-support levels.