Brent Crude Declines to Lowest in Nine Months on China Slowdown

Brent crude fell to its lowest level in nine months and West Texas Intermediate dropped below $90 a barrel, as economic growth eased unexpectedly in China, the world’s second-largest crude consumer.

Brent declined as much as 2.5 percent to its weakest since July 13. China’s gross domestic product in the first quarter rose 7.7 percent from a year earlier, according to the National Bureau of Statistics. That compares with the 8 percent median forecast in a Bloomberg survey and 7.9 percent in the prior quarter. Nicolas Maduro was elected president of Venezuela, OPEC’s third-biggest oil producer.

“This simply confirms the picture of a slowing economy” in China, said Guy Wolf, Global Head of Market Analytics at Marex Spectron Group in London, who predicts Brent may fall as low as $85 this quarter. “Globally, the picture is not healthy.”

Brent for May settlement, which expires today, fell as much as $2.56, or 2.5 percent, to $100.55 a barrel on the London- based ICE Futures Europe exchange, and traded at $101.32 at 12:57 p.m. local time. The more-active June future dropped $1.48 to $101.56 a barrel. The front-month European benchmark grade was at a premium of $11.76 to WTI futures.

WTI for May delivery decreased as much as $3.24, or 3.6 percent, to $88.05 in electronic trading on the New York Mercantile Exchange, the lowest since Dec. 21. It was at $89.56 a barrel at 12:57 p.m. London time. The volume of all futures traded was 233 percent above the 100-day average.

Iran Outlook

“Given the supply situation and the growth in supplies, the market really needed either increased political risk or a better-than-expected demand outlook to hold those prices up,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

Iran may call for an emergency meeting of the Organization of Petroleum Exporting Countries if oil prices keep falling below $100 a barrel, state-run Mehr news agency reported, citing an unidentified official in the country’s Oil Ministry.

Brent crude may trade from $110 to $115 in the second half of this year because excess supply will diminish, Morgan Stanley said in a report published today.

“We would be buyers as Brent approached $100 a barrel,” Adam Longson, an analyst at the bank in New York, said in the report.

Money Managers

Net-long positions in WTI held by money managers dropped for the first time in four weeks, according to the Commodity Futures Trading Commission’s April 12 Commitments of Traders report. They dropped by 9,080 futures and options combined, or 4.4 percent, to 196,330 in the week ended April 9, the CFTC report showed.

Hedge funds, commodity pools and commodity-trading advisers also slashed bullish bets on gasoline by the most in four months. Money managers reduced net-long positions by 17 percent to 63,856 futures and options combined, the largest drop since Dec. 11. Gasoline futures for May delivery slid as much as 5.62 cents, or 2 percent, to $2.7456 a gallon on Nymex today.

Maduro Elected

Venezuela’s Maduro, a 50-year-old former bus driver, received 50.7 percent of the votes in the nation’s presidential election, the electoral council said after more than 99 percent of ballots were counted. Maduro campaigned on a pledge to deepen 14 years of the late Hugo Chavez’s socialist revolution.

Venezuela’s investment in oil exploration and production may extend a long-term decline on Maduro’s election if he decides to continue the policy of using profits from state-owned oil company Petroleos de Venezuela SA to fund social welfare projects, the International Energy Agency said in its monthly oil market report March 13.

South Sudan has started pumping crude through Sudan, Skynews Arabia reported yesterday, without providing details. South Sudan halted production in January 2012 after accusing the Sudanese government of stealing $815 million of its oil, which Sudan said it took to recover unpaid fees. The nations agreed last month to resume southern shipments through a Red Sea export terminal within two weeks.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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