Brent Trades Near 13-Month Low Amid Supply Surplus; WTI Steady

Aug 13, 2014 7:36 am ET

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Aug. 13 (Bloomberg) -- Brent crude traded near its lowest intraday level in 13 months on speculation that supplies are excessive as Libyan output recovers and economic activity in China slows. West Texas Intermediate was steady.

Futures slipped as much as 0.6 percent in London in a fourth daily decline. Libya exported the first oil cargo from Ras Lanuf port since it was closed by rebels a year ago. China’s broadest measure of new credit plunged to the lowest since the global financial crisis, while the National Bureau of Statistics in Beijing said growth in factory production slowed. The IEA said yesterday a supply glut was shielding the market against threats to output in the Middle East.

“On the supply side, there’s been positive news from Libya even as the fighting worsens, giving a better situation in the physical market,” said Frank Klumpp, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany. “The demand side has potential for a bearish surprise as we have growing uncertainty” over China’s economy, he said.

Brent for September settlement declined as much as 65 cents to $102.37 a barrel on the London-based ICE Futures Europe exchange, the lowest since July 1, 2013. It traded for $102.91 at 12:16 p.m. London time, when the volume of all futures traded was about 46 percent above the 100-day average. The European benchmark crude was at a premium of $5.69 a barrel to WTI on ICE, after closing at $5.65 yesterday.

WTI for September delivery was 15 cents lower at $97.22 a barrel in electronic trading on the New York Mercantile Exchange, having earlier dropped as much as 31 cents to $97.06 a barrel. The contract fell 0.7 percent to $97.37 a barrel yesterday, the lowest close since Aug. 7.

China Lending

Aggregate financing in China was 273.1 billion yuan ($44 billion) in July, the central bank said today in Beijing, contrasting with a Bloomberg LP gauge that showed China loosened monetary conditions last quarter at the fastest pace in almost two years. Factory production rose 9 percent from a year earlier in July, compared with 9.2 percent in June, figures from the statistics bureau showed.

WTI was little changed before weekly supply and demand data from the Energy Information Administration, the statistical unit of the Energy Department. Crude inventories probably dropped by 2.05 million barrels to 363.6 million, according to a Bloomberg News survey. That would be a seventh weekly decline, the longest stretch since January.

Fuel Inventories

The EIA today will probably show gasoline stockpiles shrank by 1.5 million barrels, the median estimate of 10 analysts surveyed by Bloomberg shows.

The American Petroleum Institute was said to report yesterday that crude inventories rose last week by 229,000 barrels. Gasoline supplies rose by 2.7 million barrels in the week ended Aug. 8, the API reported, according to a person familiar with the data.

The EIA cut its 2014 price forecast for WTI after the U.S. reached its highest monthly production in 27 years in July. Futures will average $100.45 a barrel this year versus the July projection of $100.98, the Energy Department’s statistical arm said yesterday in its monthly Short-Term Energy Outlook. Oil output was 8.5 million barrels a day in July, the most since April 1987, the EIA said.

Brent slid yesterday after the IEA said demand growth eased to its weakest since 2012 last quarter, while crude production in the Organization of Petroleum Exporting Countries increased.

OPEC crude output increased by 300,000 barrels a day to 30.44 million in July, a five-month high, amid gains from Saudi Arabia, the IEA said in its monthly oil market report.

A crude tanker left Ras Lanuf port yesterday, Libya National Oil Co.’s spokesman, Mohamed Elharari, said. The vessel, carrying 680,000 barrels of oil, was bound for Italy, according to Ibrahim Al-Awami, the Oil Ministry’s director of measurement.

--With assistance from Ann Koh in Singapore and Ben Sharples in Melbourne.