WTI Trades Near Two-Week High on Economy; Sudan Threat

West Texas Intermediate declined from the highest closing price in more than two weeks as Chinese economic data trailed estimates and the North Sea Buzzard oil field resumed.

WTI dropped as much as 0.7 percent, halting a three-day advance. China’s industrial output rose a less-than-forecast 9.2 percent last month, while export gains were at a 10-month low and imports dropped, weekend data show. Production at the Buzzard field, the largest contributor to the benchmark Forties crude grade, returned to approximately full pumping rates over the past two days, according to two people with knowledge of the matter who asked not to be identified.

“Weakness across commodity markets is taking oil prices lower after China report weaker-than-expected growth in trade and industrial output,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.

WTI for July delivery was at $95.39 a barrel, down 64 cents, in electronic trading on the New York Mercantile Exchange at 12:41 p.m. London time. The volume of all futures traded was 16 percent below the 100-day average. Prices advanced $1.27, or 1.3 percent, to $96.03 a barrel on June 7, the highest close since May 21.

Brent for July settlement dropped 71 cents to $103.85 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to WTI was at $8.47 a barrel, compared with $8.53 on June 7.

Disappointing Demand

The Buzzard field is back to pumping 208,000 barrels a day following a halt on June 6 because of an equipment failure, the people said. Forties blend sets the value of Dated Brent, the benchmark used to price more than half of the world’s crude.

Nordea Bank AG trimmed estimates for Brent crude in 2013 to $109 a barrel from $111, and in 2014 to $111 from $115, because of disappointing demand and expanding supplies outside the Organization of Petroleum Exporting Countries, according to an e-mailed report from the Oslo-based company.

Sudan said it will stop South Sudanese exports within 60 days unless the neighboring state ends support for rebel groups. Sudan has evidence that South Sudan is backing renegade fighters opposed to the rule of Sudanese President Umar al-Bashir, Information Minister Ahmed Bilal Osman told reporters yesterday in Khartoum.

Landlocked South Sudan exports all of its crude via pipelines that traverse Sudan to Port Sudan on the Red Sea. South Sudan seceded in July 2011 and took three-quarters of the formerly united country’s crude output of 490,000 barrels a day. A dispute last year over payment for the transport resulted in South Sudanese production being shut for 15 months before it resumed in April.

China Imports

China, the world’s second-biggest crude consumer, had net imports of 5.64 million barrels a day in May, the most since January and 0.4 percent higher than April, data from the Beijing-based General Administration of Customs showed June 8. Oil-refining dropped 1.4 percent from the prior month to 9.24 million barrels a day, according to figures from the National Bureau of Statistics June 9.

The nation’s industrial production increased 9.2 percent in May from a year earlier, below the 9.4 percent median estimate of economists surveyed by Bloomberg, and factory-gate prices fell for a 15th month, the government data also showed. Exports grew 1 percent, the slowest rate in 10 months.

Money managers, including hedge funds, commodity pools and commodity-trading advisers, cut bets on rising WTI prices in the seven days ended June 4, according to the U.S. Commodity Futures Trading Commission. Net-long positions dropped by 5,404 futures and options combined, or 2.5 percent, to 212,127, the CFTC said in its June 7 Commitments of Traders report.

Hedge funds and other money managers raised bullish bets on Brent crude for a sixth week to the highest level in more than three months, data from ICE Futures Europe show.

Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 164,904 lots in the week ended June 4, the exchange said today in its weekly Commitment of Traders report. The increase of 3,354 contracts, or 2.1 percent, brings net-longs to their highest since Feb. 19.

To contact the reporter on this story: 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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