WTI Trades Near Four-Day High Amid Signs Europe Recession

West Texas Intermediate crude traded near its highest level in four days amid estimates that the euro-area edged back to growth last quarter for the first time since 2011.

Futures fluctuated in New York before data this week that will probably show gross domestic product in the 17-nation region expanded 0.2 percent in the three months through June after shrinking for the previous six quarters, according to the median of 21 economist forecasts in a Bloomberg News survey. Es Sider, Libya’s biggest oil terminal, closed after briefly reopening, an official said today. Bijan Namdar Zanganeh pledged to raise Iran’s output if he becomes the country’s oil minister.

“The worst is over for Europe but we expect growth to remain shallow rather than a return to impressive growth,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “I don’t see an environment for prices rising further at the moment. We need to absorb the oversupply first.”

WTI for September delivery advanced as much as 43 cents, or 0.4 percent, to $106.40 a barrel in electronic trading on the New York Mercantile Exchange, the highest intraday level since Aug. 6, and traded for $106.16 as of 12:15 p.m. London time. The volume of all futures traded was 12 percent below the 100-day average.

Brent for September settlement slid 7 cents to $108.15 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of as little as $1.62 to WTI, the narrowest on an intraday basis since Aug. 5.

Bullish Bets

The European Union’s statistics office in Luxembourg will release GDP data at 11 a.m. on Aug. 14.

Money managers reduced their net-long positions on WTI crude for a second week as speculation that the U.S. Federal Reserve will scale back stimulus sent prices to the longest losing streak this year.

Hedge funds cut net-long positions, or wagers that prices will rise, by 2.5 percent to 310,827 futures and options combined in the seven days ended Aug. 6, the Commodity Futures Trading Commission said in its weekly report on Aug. 9.

WTI dropped 1.2 percent on Aug. 6 on signs that the Fed may start to pull back. Fed Bank of Chicago President Charles Evans said he wouldn’t rule out a September decision to slow the pace of the central bank’s $85 billion in monthly bond buying. The purchases, known as quantitative easing, have weakened the U.S. currency and bolstered the appeal of dollar-denominated commodities as investments.

Iran Supply

Hedge funds and other money managers raised bullish bets on Brent crude to the highest level in two weeks, according to data from ICE Futures Europe.

Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 188,789 lots in the week ended Aug. 6, the London-based exchange said today in its weekly Commitments of Traders report. The increase of 7,454 contracts brings net-longs, which fell the previous week, to their highest since July 23.

Bijan Namdar Zanganeh, a former Iranian oil minister nominated by President Hassan Rohani to re-assume the post, said his “first action will be to bring the country’s oil production capacity back to 2005” levels, according to Shana, the Oil Ministry’s news website.

In 2005, the Persian Gulf nation wasn’t subject to United Nations, U.S. and European Union sanctions against its nuclear program that have restricted its crude exports. Foreign Minister Ali Akbar Salehi said the dispute has reached a “good stage” and will be resolved, according to state television reports yesterday.

Iran Decline

Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, has slipped to sixth place, producing 2.56 million barrels a day in July, according to a Bloomberg News survey of producers and analysts. It produced about 4 million barrels a day in 2005.

Iraq’s North Oil Co. increased pumping through a pipeline to Ceyhan to as much as 425,000 barrels a day. Supply averaged 300,000 to 325,000 in recent weeks, the company said Aug. 9.

Libya’s Es Sider export terminal shut today after being open briefly yesterday, Port Coordinator Captain Abu Ejela Al Zanati said by phone from the terminal today. The terminal has a capacity of as much as 350,000 barrels a day.

To contact the reporters 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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