West Texas Intermediate fell for a sixth day, marking its longest retreat in more than two years as easing supply concerns in Iraq and Libya offset the impact of rising U.S. demand before the Fourth of July holiday. Brent also declined.
Futures pared an earlier loss of 0.8 percent in New York after the U.S. unemployment rate fell to an almost six-year low. Libya is reopening the Es Sider and Ras Lanuf oil export facilities after reaching an agreement with rebels that blockaded the ports for the past year, said Ahmed al-Amin, a government spokesman. The Islamist insurgency in Iraq still hasn’t spread to the south, home to more than three-quarters of its output. U.S. crude stockpiles dropped more than expected last week as demand climbed.
“We are in a corrective phase, as a result of no interruption in Iraqi crude supplies and renewed hints that Libyan oil production may rise,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by e-mail. “If Libyan exports do not resume quickly, the market will discard the announcement relatively quickly as it did on previous occasions.”
WTI for August delivery declined as much as 79 cents to $103.69 a barrel in electronic trading on the New York Mercantile Exchange and traded for $103.99 at 1:37 p.m. London time. The contract fell 86 cents to $104.48 yesterday, the lowest close since June 11. The volume of all futures traded was about 21 percent above the 100-day average for the time of day. Prices have gained 5.7 percent this year.
Brent for August settlement dropped as much as 71 cents, or 0.6 percent, to $110.53 a barrel on the London-based ICE Futures Europe exchange, the lowest in three weeks. The European benchmark crude traded at a premium of $6.60 to WTI on ICE. The spread narrowed for a third day yesterday to close at $6.76.
Front-month Brent traded at a discount to the second month on ICE, marking the first appearance of a contango since April 15. The August contract was as much as 10 cents cheaper than September. Contango typically reflects that immediate supplies are out-pacing demand.
Libya’s biggest and third-largest oil ports were handed over to government control yesterday after a deal with rebels, al-Amin, the Libyan government spokesman, said by phone today. Es Sider and Ras Lanuf, which can handle a combined 560,000 barrels a day of crude, could boost Libya’s export capacity almost five-fold. Preparations are under way to ensure the ports operate at maximum capacity, the Libyan government said on its website.
The rebels, who are seeking self-rule for a region known as Cyrenaica, occupied the facilities in July last year, demanding to share oil revenues to make up for neglect experienced under Muammar Qaddafi’s 42-year rule. Libya, a member of the Organization of Petroleum Exporting Countries, holds Africa’s biggest reserves.
“Libya will just add more supply, and the world is awash with oil,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s nothing new from Iraq and investors are starting to realize that there’s not going to be a major effect in terms of supply.”
In Iraq, oil exports have been unaffected by an Islamist insurgency in the north. The country will ship 2.8 million barrels a day this month, close to a record high, loading programs obtained by Bloomberg show.
U.S. employers added more workers than projected in June and the unemployment rate fell to an almost six-year low of 6.1 percent, underscoring a brighter labor market that will help spur the economy. The addition of 288,000 jobs followed a 224,000 gain the prior month that was bigger than previously estimated, Labor Department figures showed today in Washington.
Crude inventories in the U.S., the world’s largest oil consumer, shrank by 3.2 million barrels to 384.9 million in the week ended June 27, the Energy Information Administration reported yesterday. Supplies were projected to decrease by 2.4 million, according to the median estimate in a Bloomberg News survey of 10 analysts.
Gasoline stockpiles slid by 1.24 million barrels, the first drop in five weeks, said the EIA, the Energy Department’s statistical arm. Petroleum consumption climbed 626,000 barrels a day last week to 19.4 million. Gasoline demand rose 355,000 to 9.17 million.
To contact the editors responsible for this story: Alaric Nightingale at email@example.com James Herron, Bruce Stanley