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Oil Falls to One-Month Low on Retail Sales

West Texas Intermediate crude fell to a one-month low after U.S. retail sales and consumer confidence declined, signaling lower fuel demand.

Futures dropped 2.4 percent as Commerce Department figures showed that sales slipped 0.4 percent last month, the most since June. A gauge of U.S. consumer sentiment also declined to a nine-month low. Cyprus was said to seek an increase in the 10 billion euros ($13 billion) in aid pledged by the European Union. The Standard & Poor’s GSCI Index of 24 commodities tumbled, led by metals and energy futures.

“Until we see some stronger figures signaling greater economic growth, oil pieces should move lower,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in Boston. “The numbers we’re getting aren’t living up to expectations.”

WTI crude oil for May delivery declined $2.22 to $91.29 a barrel on the New York Mercantile Exchange, the lowest settlement since March 6. Prices fell 1.5 percent this week and are down 0.6 percent this year. The volume of all futures traded was 74 percent higher than the 100-day average at 4:26 p.m.

Brent for May settlement fell $1.16, or 1.1 percent, to end the session at $103.11 a barrel on the London-based ICE Futures Europe exchange. It was the lowest settle since July 13. Volume was 75 percent above the 100-day average for the time of day.

WTI’s discount to Brent shrank to as little as $10.34 a barrel, the least on an intraday basis since Jan. 26, 2012. The spread ended the session at $11.82.

Abandoned Ship

“It looks like the ship is being abandoned,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “This is the second day in which we’ve seen strong selling accompanied by high volume in both WTI and Brent. The next target for WTI is right below $90, which is where we bounced from a little over a month ago.”

Department stores and electronics dealers were among the retail outlets with the weakest showings, according to the Commerce Department report released in Washington. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March.

Consumer Confidence

Confidence among Americans fell in April, which may point to lower consumer spending. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. This month’s reading was lower than all 69 estimates in a Bloomberg survey that called for no change.

The economic figures also sent equities lower. The Standard & Poor’s 500 Index (SPX) dropped 0.3 percent and the Dow Jones Industrial Average was little changed.

Cypriot President Nicos Anastasiades will write to EU President Herman Van Rompuy and others to request further aid, said a government official who asked not to be identified.

“The Cyprus news kicked off the move lower because it raises the prospect of the European crisis getting even worse, if that’s possible,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The retail-sales numbers were poor. These headlines are raising the prospect of a spring swoon across the commodity markets.”

The GSCI Index of raw materials dropped as much 2.2 percent to 617.55, the lowest intraday level since July 13.

Cycle Ends

Citigroup Inc. “expects 2013 to be the year in which the death bells ring for the commodity supercycle after its duly noted sunset,” Ed Morse, Citigroup’s global head of commodities research in New York, said in a report today. There will be more “many more losers than winners” for commodities this quarter, according to the report.

The International Energy Agency, the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration cut their forecasts for 2013 global oil demand this week. Consumption will rise by 795,000 barrels a day, or 0.9 percent, to average 90.58 million a day this year, the Paris-based IEA said yesterday. That’s down 45,000 barrels a day from its March forecast.

“IEA, OPEC and EIA demand forecasts were all cut this week,” Armstrong said. “We are seeing a big increase in bearish signals.”

Fuel Prices

Gasoline for May delivery fell 2.92 cents, or 1 percent, to $2.8018 a gallon on the Nymex, the lowest settlement since Jan. 18. Total volume was 7.5 percent below the 100-day average.

Ultra-low-sulfur diesel for May delivery declined 2.73 cents, or 0.9 percent, to end the session at $2.8718 a gallon in New York. Volume was 34 percent above the 100-day average.

“The market is looking pretty apocalyptic,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “We’re seeing a massive selloff in oil and fuel right now. Gasoline and diesel are very weak.”

Implied volatility for at-the-money WTI crude options expiring in June was 20.9 percent, up from 19.3 percent yesterday. The figure has slipped from 24.7 percent on Feb. 21.

Electronic trading volume on the Nymex was 800,371 contracts as of 4:27 p.m. It totaled 498,076 contracts yesterday, 14 percent below the three-month average. Open interest was a record 1.77 million contracts.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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