Oil dropped for a third time in four days after Norway ended an energy strike that threatened to halt production by western Europe’s largest crude exporter and China curbed purchases of the commodity.
Futures slipped as much as 1.6 percent after the Norwegian government ordered compulsory arbitration in the dispute, preventing a lockout of platform workers that was scheduled to start at midnight yesterday. Norway pumped 1.63 million barrels of oil a day in May, or about 1.8 percent of global consumption, data from the Norwegian Petroleum Directorate show. China’s net crude imports fell to the lowest level this year, according to customs data today.
“It was looking like the strike was going to deteriorate further,” said David Lennox, an analyst at Fat Prophets in Sydney. “That risk premium is certainly coming out of crude.”
Oil for August delivery fell as much as $1.37 to $84.62 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.87 at 3:08 p.m. Singapore time. The contract climbed 1.8 percent yesterday to $85.99, the highest close since July 5. Prices are 14 percent lower this year.
Brent crude for August settlement decreased $1.76, or 1.8 percent, to $98.56 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $13.69, down from $14.33 yesterday.
Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.66 a barrel today, according to data compiled by Bloomberg. Futures yesterday rebounded after trading near that indicator. Buy orders tend to be clustered close to chart-support levels.
Norway announced the arbitration in a statement published on the Oslo-based Labor Ministry’s website today. The strike, which started June 24, disrupted about 15 percent of the nation’s oil output and 7 percent of natural gas, the Oil Industry Association said June 27. Statoil ASA, the country’s largest energy company, said it will resume full production within a week.
Oil extended its drop after a report from China’s General Administration of Customs showed the nation’s net crude imports fell to 5.28 million barrels a day in June. That’s the least since purchases of 5.1 million barrels a day in December and compares with a record 5.98 million in May, according to data compiled by Bloomberg. China is the world’s second biggest crude consumer after the U.S.
The customs bureau also reported that imports of goods increased 6.3 percent in June from a year earlier, below the 11 percent median estimate in a Bloomberg News survey. Export growth was 11.3 percent, down from 15.3 percent in May.
Money managers increased bullish U.S. oil wagers in the seven days ended July 3, according to the Commodity Futures Trading Commission’s Commitments of Traders report yesterday. Net-long positions advanced by 10,994, or 8.9 percent, to 135,011 futures and options combined.
U.S. oil supplies probably declined for a third week as refineries processed more crude into gasoline to meet peak summer demand and as imports declined, a Bloomberg News survey shows. Stockpiles fell 1.38 million barrels in the seven days ended July 6, according to the median of eight analyst estimates before an Energy Department report tomorrow.
Refineries stepped up operations to 92.5 percent of their capacity last week, up 0.5 percentage point from the previous week and near the five-year high of 92.6 percent reached June 22, the survey showed.
Oil rose yesterday after Shargh, a Tehran-based newspaper, said several Iranian lawmakers plan to propose a bill to impose tariffs on tankers sailing through the Strait of Hormuz. Iran has threatened to shut the strait, a transit route for about a fifth of the world’s crude shipments, in response to sanctions on its nuclear program.
Helga Schmid, an aide to European Union foreign policy chief Catherine Ashton, and Iran’s negotiator, Ali Bagheri, will meet on July 24 in an effort to continue international talks over the program, the EU said in an e-mailed statement yesterday.