WTI Rises to One-Week High on Fed, China Manufacturing

West Texas Intermediate climbed to the highest level in a week as the Federal Reserve maintained its bond-buying program, Chinese manufacturing strengthened and Libya closed most of its oil terminals amid protests.

Futures climbed as much as 2.1 percent in New York after rising yesterday by the most in three weeks. The Fed said yesterday that persistently low inflation could hamper the economic expansion and pledged to keep buying $85 billion in bonds every month. China’s Purchasing Managers’ Index increased to 50.3 last month, exceeding the 49.8 median forecast in a Bloomberg survey. Libyan export capacity will plunge almost 80 percent, Oil Minister Abdulbari Al-Arusi said yesterday.

“The Fed statement is the main driver of the market for the moment,” said Myrto Sokou, an analyst at London-based Sucden Financial Ltd. It signaled that “quantitative easing is here to stay for a while,” and there could be “further gains in the oil market,” she said.

WTI for September delivery advanced as much as $2.21 to $107.24 a barrel in electronic trading on the New York Mercantile Exchange, the highest since July 24, and was at $106.78 as of 1:47 p.m. London time. The volume of all futures traded was 49 percent higher than the 100-day average. Prices advanced 8.8 percent in July for a second monthly increase.

Brent Premium

Brent surpassed $109 a barrel on the London-based ICE Futures Europe exchange for the first time since July 19. Contracts for September settlement gained as much as $1.75, or 1.6 percent, to $109.45 a barrel. The European benchmark was at a premium of $1.95 to WTI. The spread narrowed for the first time in six days to $2.67 yesterday.

China’s manufacturing index, reported today by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, suggested that a slowdown in the world’s second-biggest economy may be stabilizing as the government takes steps to support growth. The July reading above 50 indicated manufacturing is expanding.

“China’s PMI is better than expected, and that built on the news of the better GDP figure from the U.S.,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “We would need to see WTI move past its recent highs to conclude that the current movement wasn’t an upward correction against a bigger downward movement.”

The Federal Open Market Committee said after a two-day meeting in Washington that it remains committed to monthly bond purchases of $85 billion. U.S. gross domestic product rose at a 1.7 percent annualized rate in the second quarter, the Commerce Department said yesterday. That’s more than a 1 percent gain predicted by economists surveyed by Bloomberg.

Oil Supplies

Crude stockpiles at Cushing, Oklahoma, the main U.S. oil storage hub, fell by 1.9 million barrels to a 15-month low of 42.1 million in the week ended July 26, according to data from the Energy Information Administration yesterday. Supplies are at their lowest level since April 2012.

Total U.S. crude inventories increased by 431,000 barrels last week, said the EIA, the Energy Department’s statistical arm. Stockpiles were estimated to decline by a median 2.45 million, according a Bloomberg survey of 12 analysts.

The Organization of Petroleum Exporting Countries pumped less crude for a second month in July amid the biggest drop in Libyan output since the 2011 war that overthrew Muammar Qaddafi. The group’s production fell 245,000 barrels, or 0.8 percent, to an average 30.662 million barrels a day from a revised 30.907 million in June, a Bloomberg survey of oil companies, producers and analysts shows. OPEC’s 12 members supply about 40 percent of the world’s oil.

Libya’s port of Zawiya, capable of handling 300,000 barrels a day, is operating, while the largest port, Es Sider, and others including Ras Lanuf, Marsa Brega and Hariga are shut, Oil Minister Al-Arusi said at a news briefing in Tripoli. The closures will reduce exports by about 1.1 million barrels from yesterday’s level of 1.425 million, he said.

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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