Brent crude fell for the first time in four days as euro-area services and manufacturing output contracted for a 15th month in April. Goldman Sachs Group Inc. cut its 2013 Brent forecast by $5 a barrel to $105.
Futures dropped as much as 1.6 percent in London as a Purchasing Managers’ index held at 46.5, Markit Economics said. That was in line with economists’ forecasts in a Bloomberg News survey. A reading below 50 indicates contraction. Earlier, the PMI index on China came in at 50.5, below analysts estimates, raising speculation that consumption will falter in the world’s second-biggest crude user.
“We started the day with weak figures from China and then after that there were disappointing figures from the euro-zone, particularly from Germany,” Thina Saltvedt, an analyst at Nordea Bank AG, said by phone from Oslo today. “It seems like the Chinese economy is slowing down at the moment and it doesn’t seem the euro-zone is stabilizing as had been hoped.”
Brent for June settlement fell as much as $1.61 to $98.78 a barrel on the ICE Futures Europe exchange. It was at $99.45 as of 1:18 p.m. local time. The volume of all contracts traded was 6 percent above the 100-day average. Prices are down 10.5 percent this year.
West Texas Intermediate for June delivery declined as much as $1.39 to $87.80 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.38 at the same time today. The May contract climbed 75 cents to $88.76, the highest close since April 12, as it expired yesterday. The front-month European benchmark grade was at a premium of $11.07 to WTI futures compared with $11.20 yesterday.
Goldman Sachs cut its 2013 forecast highlighting increased risk that Chinese oil demand growth will remain weak in the near term, it said in a note dated today.
WTI may resume its decline this week as a measure of technical momentum falters. On the weekly chart, the moving average convergence-divergence indicator has fallen below zero this week for the first time since January, according to data compiled by Bloomberg. Futures yesterday halted an intra-day drop at $87.55 a barrel, the 200-week moving average. Buy orders tend to be clustered near chart-support levels.
China’s commercial stockpiles of crude gained 2.2 percent at the end of March from February, the first increase in six months, a report from Xinhua News agency’s China Oil, Gas & Petrochemicals newsletter showed today. Xinhua doesn’t publish specific volumes.
U.S. gasoline supplies were probably unchanged last week while distillate inventories, including heating oil and diesel, increased by 400,000 barrels, the Bloomberg survey showed before a report tomorrow from the Energy Information Administration. The nation’s crude output in the prior week was up 0.4 percent at 7.21 million barrels a day, the EIA, the Energy Department’s statistical arm, said April 17. Production was the highest since 1992 and 19 percent more than a year earlier.
The American Petroleum Institute in Washington is scheduled to release separate supply data today. The industry group collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.
The Organization of Petroleum Exporting Countries needs to make room for rising supply from Iraq and Venezuela and $90 a barrel may be the price ceiling, rather than floor, in five years, Ed Morse, Citigroup’s global head of commodity research, said today at the Middle East Petroleum and Gas Conference in Abu Dhabi. The 12-member group pumps about 40 percent of the world’s crude.
Global oil markets are in balance and receiving ample crude, Suhail Mohammed Al Mazrouei, the energy minister of the United Arab Emirates, said yesterday. OPEC, which plans to meet May 31 to review its output target, is ensuring that supplies are sufficient, he told reporters at the same conference.
The U.A.E.’s governor to OPEC, Ali Al Yabhouni, said the group’s limit of 30 million barrels a day is adequate for 2013 and predicted oil would trade at about $100 a barrel in the third quarter. OPEC’s basket of crude was $97.75 yesterday.
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