BLBG: WTI Oil Drops for Second Day on U.S. Crude Production
West Texas Intermediate crude dropped for a second day, extending the biggest loss in more than a month, as U.S. crude output surged to a 22-year high.
Futures fell as much as 1 percent after decreasing 1.7 percent yesterday after the Energy Information Administration reported U.S. output rose to 7.56 million barrels a day last week, the most since December 1990. Declines eased after orders for U.S. durable goods climbed in June. In Germany, data showed business confidence increased for a third month in July.
“The market is moving lower because concerns about supply are reduced,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Yesterday’s report showed that U.S. oil production was at a 22-year high last week. The durable goods number was good but it wasn’t enough to move the market into positive territory.”
WTI crude for September delivery declined 22 cents to $105.17 a barrel at 9:29 a.m. on the New York Mercantile Exchange. Futures touched $104.31, the lowest level since July 11. The volume of all futures traded was about 3 percent below the 100-day average for the time of day.
Brent for September settlement slipped 5 cents to $107.14 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 12 percent below the 100-day average. The European benchmark traded at a $1.97 premium to WTI, up from $1.80 yesterday. Brent dropped below the WTI on July 19 for the first time since August 2010.
U.S. Output
U.S. crude production has surged as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in the central part of the country.
Crude inventories decreased 2.8 million barrels last week, data yesterday from the EIA, the Energy Department’s statistical arm, show.
Bookings for U.S. goods meant to last at least three years increased 4.2 percent, led by transportation equipment, after a revised 5.2 percent gain in May that was bigger than initially reported, the Commerce Department said today in Washington. The median forecast of 79 economists surveyed by Bloomberg called for a 1.4 percent advance.
Another report showed more people in the U.S. filed for unemployment benefits last week. Jobless claims rose by 7,000 to 343,000 in the period ended July 20, the Labor Department said.
The Ifo Business Climate Index in Germany advanced to 106.2 for July, up from 105.9 in June and 0.1 higher than forecast.
Tropical Storm
Tropical Storm Dorian moved across the Atlantic on a westward path that may take it to the Caribbean Sea, the U.S. National Hurricane Center said. The system, with top sustained winds of 60 miles (95 kilometers) per hour, was about 700 miles west of the Cape Verde Islands, an advisory issued at 5 a.m. New York time showed. Projections show that the storm will pass north of Puerto Rico on Monday or Tuesday.
The Muslim Brotherhood’s leader called on Egyptians to rally in support of “freedom,” setting the Islamists on a collision course with an army that’s signaled it is running out of patience with protests in support of ousted President Mohamed Mursi. The appeal by Mohammed Badie, the Brotherhood’s supreme guide, came a day after military chief Abdelfatah al-Seesi urged Egyptians to take to the streets tomorrow to give the military and police a broad mandate to combat “violence” and “terrorism.”
“We still have Tropical Storm Dorian out there and geopolitical issues in Egypt,” Flynn said. “If either heats up, we could see the market rebound.”
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net
