BLBG:Oil Declines From One-Month High On Fuel Demand Concern
Brent oil futures retreated from the highest close in more than a month on speculation that this week’s gains may have been excessive amid concern over the possible impact on demand of a global economic slowdown.
Futures fell as much as 1.4 percent after rising 10 percent since June 28. Societe Generale SA cut its crude-price forecasts, citing ample supply as Europe’s crisis and a slowing Chinese economy threaten to curb investor demand for commodities. Iran will meet world powers in Istanbul today to seek a diplomatic solution to a dispute over its nuclear program. Norwegian oil workers decided yesterday not to intensify a strike. Floor trading will be shut today for the U.S. Independence Day holiday.
Prices declined on “profit-taking after rallying on Tuesday and Friday,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mail. “With the U.S. off, it will be quiet today. More importantly, offshore oil workers’ unions in Norway decided not to escalate the strike.”
Brent crude for August settlement was down as much as $1.36, or 1.4 percent, at $99.26 a barrel on the ICE Futures Europe exchange in London. It trimmed losses to trade at $99.96 as of 9:53 a.m. local time. The European benchmark was at a premium of $12.71 to West Texas Intermediate crude in New York from $13.02 yesterday.
West Texas Intermediate oil for August delivery fell as much as $1.16 to $86.50 a barrel on the New York Mercantile Exchange. The contract increased yesterday by $3.91 to $87.66 a barrel, the highest close since May 30. Prices have lost 12 percent this year.
Norway Disruption
Norway’s oil and gas unions decided not to expand a strike that has closed down 250,000 barrels a day of oil production, disrupting about 15 percent of the nation’s crude supply, Hilde- Marit Rysst, leader of the SAFE union, said by phone from Stavanger, Norway, yesterday.
Iran will meet diplomats from China, France, Germany, Russia, the U.K. and the U.S. for the second time in two weeks to discuss its nuclear program, which has prompted international sanctions on its oil exports. Talks on June 20 in Moscow failed to yield a compromise.
The Persian Gulf nation’s Revolutionary Guard Corps fired long-range missiles as part of a war game targeting potential enemies, state media reported yesterday. The country’s parliament is working on legislation to close the Strait of Hormuz, passage for a fifth of the world’s oil trade, to tankers linked to countries applying the embargo.
‘Saber-Rattling’
“The saber-rattling has affected sentiment a bit, but there’s plenty of oil out there,” Victor Shum, the managing director of IHS Energy Group in Singapore, said in a Bloomberg Television interview. “The concern in the market has more to do with the economy in China, the U.S. and of course in Europe.”
Gasoline stockpiles in the U.S., the world’s largest oil consumer, probably increased for the fourth time in five weeks, a Bloomberg News survey showed before an Energy Department report tomorrow. Supplies were up 1 million barrels in the week ended June 29, according to the median estimate of nine analysts. The industry-funded American Petroleum Institute said yesterday that inventories declined by 1.4 million barrels.
West Texas crude will trade at $84.17 a barrel in the third quarter and Brent may average $96.67, Michael Wittner, Societe Generale’s head of oil-market research in New York, said in a report e-mailed today. The bank earlier forecast $97.50 for WTI and $110 for Brent.
“From current amply supplied levels, especially for sweet crude, the market should be balanced and neutral going forward,” Wittner said. He said potential economic slowdowns in the U.S., China or Europe and any agreement in the Iranian nuclear talks would pose downside risks for oil prices.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net Lananh Nguyen in London at lnguyen35@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
