WTI Crude Trades Near One-Week High; Funds Reduce Bullish Bets

West Texas Intermediate crude traded near the highest price in a week as investors speculated that declines over the past three weeks were excessive. Hedge funds cut bullish bets on WTI by the most in almost two months.

Futures fluctuated in New York after gaining the past two days. WTI fell in the seven days ended April 19 for a third weekly decline, the longest run since November. Money managers reduced net-long positions, or wagers that U.S. prices will rise, by 6.8 percent in the week ended April 16, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report on April 19. It was the biggest drop since the period ended Feb. 26.

“While we’re holding around this zone, the outlook is starting to look more positive for oil,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “We should see a floor under oil at current levels. A lot of the falls that we’ve seen, not only in oil but other industrial commodities, were related to the weaker growth numbers that we’ve seen out of China and the U.S.”

WTI for May delivery, which expires today, was at $88.14 a barrel, up 13 cents, in electronic trading on the New York Mercantile Exchange at 3:06 p.m. Singapore time. The more-active June future was up 18 cents at $88.45. The volume of all contracts traded was 10 percent below the 100-day average. Crude gained 28 cents to $88.01 on April 19, the highest closing price since April 16, while dropping 3.6 percent over the week.

Triangle Pattern

Brent for June settlement on the London-based ICE Futures Europe exchange slid 14 cents to $99.51 a barrel. The front- month European benchmark grade was at a premium of $11.06 to WTI, from $11.38 on April 19.

WTI for June delivery will probably rebound as futures stay within a triangle pattern on the weekly chart going back to September, Stephanie Aymes, a London-based technical analyst at Societe Generale SA, said in a e-mailed report on April 19. The technical formation has a lower and upper boundary of about $86 and $98 a barrel this week.

Net-long positions in WTI held by money managers, including hedge funds, commodity pools and commodity-trading advisers, declined by 13,298 futures and options combined to 183,032, the least since the week ended March 19, the CFTC report showed. Hedge funds and other large speculators reduced bullish U.S. gasoline wagers by 10,350 futures and options combined, or 16 percent, to 53,506. It was the lowest level since July.

Pump Prices

The average price for regular gasoline at U.S. pumps fell 11.04 cents a gallon in the past two weeks to $3.5363, according to Lundberg Survey Inc. The survey covers the period ended April 19 and is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company. The average price has dropped 25.87 cents from the peak on Feb. 22, and 37.64 cents from the price on April 20, 2012, Lundberg said.

The International Monetary Fund lowered its global economic growth forecasts for 2013 on April 16. The projection for the U.S., the world’s largest oil consumer, was cut to 1.9 percent from 2 percent. China, the second-biggest crude user, was reduced to 8 percent from 8.2 percent.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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