BLBG:Oil Drops From Nine-Week High On Signs Demand May Weaken
Oil fell from a nine-week high in New York, paring a second weekly advance, as worse-than-expected economic data added to signs seasonal crude demand is weakening.
Futures slipped as much as 1.4 percent, snapping a seven- day run of gains that was the longest since February. Oil may fall next week on signs of slowing economic growth, according to a Bloomberg News survey. European stocks slipped and the euro weakened before finance ministers hold a conference call to set terms for Spain’s bailout. Existing U.S. home sales unexpectedly dropped in June and manufacturing in the Philadelphia region contracted a third month in July, reports showed yesterday.
“After seven sessions of gains it’s only natural to have some pre-weekend profit-taking,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts Brent may be capped at $108 a barrel. “It’s the demand side that’s especially concerning, and sustained gains past $108 in London may be hard to justify. Geopolitics will still support, with matters getting out of hand in Syria, and more hostile rhetoric between the U.S. and Iran.”
Crude for August delivery, which expires today, lost as much as $1.30 to $91.36 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.51 at 12:03 p.m. London time. It climbed 3.1 percent yesterday to $92.66, the highest close since May 16. The more-actively traded September future decreased $1.15 cents to $91.82. Front-month prices are 5.1 percent higher this week and down 7.4 percent this year.
Brent crude for September settlement was at $106.76 a barrel, down $1.04, on the London-based ICE Futures Europe exchange. The European benchmark was at a premium to West Texas Intermediate of $14.94, compared with $14.83 yesterday.
Ichimoku Cloud
The Stoxx Europe 600 Index slipped 0.3 percent at 9:47 a.m. in London, trimming a seventh weekly advance. The euro slipped 0.2 percent versus the dollar.
Oil in New York may drop toward $80 a barrel as prices fail to break through the top of a so-called Ichimoku cloud, according to technical analysis by Barclays Plc. WTI futures may be capped at $93.75, the upper boundary of the cloud which is calculated by analyzing the midpoints of historical highs and lows and is used to show where buy orders may be clustered.
Fourteen of 32 analysts surveyed by Bloomberg News forecast crude will drop through July 27. Twelve respondents, or 38 percent, predicted that futures will rise and six said there will be little change in prices.
U.S. home purchases slid 5.4 percent in June to a 4.37 million annual rate, an eight-month low, figures from the National Association of Realtors showed in Washington. The Federal Reserve Bank of Philadelphia’s general economic index was minus 12.9 in July after minus 16.6 the month before. Readings of less than zero signal contraction.
OPEC Shipments
“The negatives are the economy,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity- markets newsletter in Sydney, said in a telephone interview. “We’ve had seven days of gains, the market is long, the window closes very quickly with this sentiment.”
The Organization of Petroleum Exporting Countries, responsible for about 40 percent of global supplies, will curb exports by 0.9 percent to 23.78 million barrels a day in the four weeks to Aug. 4, compared with 24 million a month earlier, Oil Movements said yesterday in an e-mailed report. The data exclude Angola and Ecuador. Western sanctions on Iranian shipments will also contribute to the drop, the researcher said.
Oil surged yesterday on concern that increased tension in the Middle East will threaten crude supplies. Israeli Prime Minister Benjamin Netanyahu blamed Lebanon’s Iranian-backed Hezbollah organization for a bus bombing in Bulgaria that killed Israeli tourists and threatened a forceful response. In Damascus, Syrian government forces battled rebels in retaliation for a blast that killed three top anti-insurgency leaders.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
