WTI Trades Near Seven-Month Low Before Supply Data; Brent Steady

Aug 26, 2014 9:04 am ET

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Aug. 26 (Bloomberg) -- West Texas Intermediate traded near the lowest closing price in seven months after speculators cut bullish bets and as supply rises in the U.S., the world’s biggest consumer. Brent was steady in London.

Futures were little changed in New York after falling 0.3 percent yesterday. Crude inventories probably shrank by 1.8 million barrels to 360.7 million last week, a Bloomberg survey shows before an Energy Information Administration report tomorrow. Stockpiles have risen to the highest level for this time of the year since 1990 amid increased U.S. production. Money managers cut bullish bets on WTI by 14 percent in the week ended Aug. 19, Commodity Futures Trading Commission data show.

“The focus on ample crude supply has been dominating the market,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “Now that net-long positions have come down again, that’s helping stabilize things.”

WTI for October delivery was at $93.63 a barrel in electronic trading on the New York Mercantile Exchange, up 28 cents, at 1:52 p.m. London time. The contract slid 30 cents to $93.35 yesterday, the lowest close since Jan. 14. The volume of all futures traded was about 43 percent below the 100-day average. Prices have declined 4.7 percent this year.

Brent for October settlement was unchanged at $102.65 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $9.01 to WTI. The spread closed at $9.30 yesterday, the widest since March 14.

Net-Longs Drop

Speculators are the least bullish on U.S. crude prices in 16 months. Net-longs for WTI slipped by 30,225 to 188,589 futures and options, the lowest level since the seven days ended April 23, 2013, CFTC data show. Bullish bets on Brent are at the lowest level in two years, data released yesterday by the ICE exchange show.

U.S. crude production will reach 8.46 million barrels a day this year and 9.28 million in 2015, the highest annual average since 1972, according to the EIA, the Department of Energy’s statistical arm.

U.S. gasoline inventories probably dropped by 1.73 million barrels in the week ended Aug. 22, according to the median estimate in the Bloomberg survey of eight analysts. Distillate stockpiles, including heating oil and diesel, are forecast to have decreased by 300,000 barrels, the survey shows.

The American Petroleum Institute in Washington is scheduled to release separate supply data today. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.

Inventory Data

Crude stockpiles were at 362.5 million barrels through Aug. 15, the government data show. U.S. production climbed to 8.5 million barrels a day in July, the most since April 1987, the EIA said in its monthly Short-Term Energy Outlook on Aug. 12.

Libya’s output has fallen because of power outages at some fields, according to state-run National Oil Corp. Daily production fell to 630,000 barrels today, according to Mohamed Elharari, a spokesman at National Oil. Output was at 656,000 barrels a day on Aug. 24.

The Waha field, which supplies Es Sider port, isn’t producing and should start next week, Elharari said.

Iraq’s semi-autonomous Kurdistan Regional Government can bring $100 million of crude ashore in Texas after a U.S. judge threw out a court order that would have required federal agents to seize and hold the cargo for the Iraqi Oil Ministry until a court there decided which government owns it.

Acceptance of Kurdish crude by international buyers and by the country’s central government would boost the nation’s total exports by about 12 percent, according to Julian Lee, a strategist at Bloomberg First Word whose views are his own.