Brent Falls for Third Day in Four as Germany Output Drops

Brent crude dropped for the third time in four days after Germany’s industrial production unexpectedly dropped for a second month, signaling an uneven recovery in Europe’s largest economy.

Futures fell as much as 1 percent in London after data from Germany showed that output decreased 1.2 percent in October after a 0.7 percent drop the previous month, the Economy Ministry in Berlin said today.

“The German figures are the only thing I could see that could have moved the market today,” Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said by phone today. “The oil price rose sharply last week and so there was probably also a bit of profit-taking based on that. There aren’t as many important macro-releases this week so the German data carries more significance.”

Brent for January settlement dropped as much as $1.06 to $110.55 and was at $110.89 a barrel as of 1:15 p.m. local time on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $13.21 to WTI, heading for the narrowest close since Nov. 19. The volume of all futures traded was about 9 percent below the 100-day average.

WTI for January delivery was little changed at $97.66 a barrel on the New York Mercantile Exchange, compared with a 200-day moving average of $98.53. The contract rose 27 cents to $97.65 on Dec. 6, the highest close since Oct. 29 after climbing for the previous six days.

Bullish Bets

Hedge funds and other money managers raised bullish bets on Brent crude for a third week, according to ICE. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 131,416 lots in the week ended Dec. 3, the exchange said today in its weekly Commitments of Traders report. The increase of 1,655 contracts, or 1.3 percent brings their net-long positions to the highest since the week ended Oct. 22.

WTI rose as much 0.3 percent earlier today after U.S. employers added 203,000 workers to non-farm payrolls last month, according to Labor Department data released on Dec. 6. It was more than the 185,000 increase predicted in a Bloomberg News survey.

Crude Imports

China’s trade surplus last month swelled to $33.8 billion, the largest in more than four years as exports exceeded estimates, figures from the General Administration of Customs showed yesterday. The country’s net crude imports rose 19 percent to 5.73 million barrels a day last month, climbing from the lowest level in 14 months, according to the same data.

“Even allowing for the improvement in Chinese and U.S. data, it will take something significant to take U.S. crude prices out of their current downtrend,” Michael Hewson, a London-based market analyst for CMC Markets Plc, said by e-mail. “WTI has certainly been outperforming in recent days but the fact remains that it is below its 200-day moving average, while Brent prices are above. WTI is in a downtrend unlike Brent.”

U.S refinery runs rose by 555,000 barrels a day in the week ended Nov. 29, according to Energy Department data released Dec. 4. Refineries operated at 92.4 percent of capacity, the most since September. Utilization rates usually pick up in December after maintenance is performed during the lull in fuel demand between the summer driving season and the winter heating period.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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