March 21 (Bloomberg) -- West Texas Intermediate declined after its biggest advance in two weeks as Euro-area services and manufacturing contracted and Cyprus’s president worked on a new plan to secure a financial bailout from the euro area.
Futures dropped as much as 0.8 percent in New York and pared losses after Labor Department figures showed fewer Americans than forecast filed first-time claims for unemployment insurance last week. The European Central Bank said today it may cut Cypriot banks off from emergency funds after March 25 as the island nation’s president, Nicos Anastasiades, raced to draft a new bailout proposal. Industrial output and services in the euro area shrank more than economists estimated in March.
“The Cyprus situation is a sign that the European debt crisis is far away from being solved,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, who correctly predicted last week that prices would decline. “There’s quite a fundamental weakness in the oil market. A correction could come at any time.”
WTI for May delivery fell as much as 71 cents to $92.79 a barrel in electronic trading on the New York Mercantile Exchange. It was at $93.35 at 12:55 p.m. London time. The volume of all futures traded was 40 percent below the 100-day average. The April contract, which expired yesterday, closed 80 cents higher at $92.96.
Brent for May settlement on the London-based ICE Futures Europe exchange slid 23 cents to $108.49 a barrel. The volume of all futures traded was 9 percent above the 100-day average. The European benchmark grade was at a premium of $15.15 to WTI. The gap was $14.93 on March 19, the narrowest settlement since July.
The Cypriot government’s alternative plan may include a new version of the deposit tax, according to an official who spoke after a meeting of the cabinet yesterday and asked not to be identified in line with government policy. The country’s central bank declared that banks would stay shut for another two days, effectively barring Cypriots from access to their accounts until March 26, when lenders are due to reopen after a local holiday.
Crude declined after prices failed to surmount technical resistance along the middle Bollinger Band, near $94.10 a barrel, according to data compiled by Bloomberg.
Front-month WTI futures have traded near the middle Bollinger indicator for the past four days without settling above it, according to data compiled by Bloomberg. Sell orders tend to be clustered close to chart-resistance levels.
“Worries are creeping back in relation to Cyprus, so we’re seeing some selling,” said Victor Shum, the managing director of IHS Consulting in Singapore.
A composite index based on a survey of purchasing managers in European manufacturing and services fell to 46.5 from 47.9 in February, London-based Markit Economics said today. Economists had forecast a reading of 48.2, according to the median of 23 estimates in a Bloomberg survey. A reading below 50 indicates contraction.
Applications for jobless benefits in the U.S. increased by 2,000 to 336,000 in the week ended March 16, Labor Department figures showed today. Economists projected 340,000 claims, according to the median estimate in a Bloomberg survey.
U.S. oil inventories fell by 1.3 million barrels last week, the first drop in two months, an Energy Department report showed yesterday. Supplies were forecast to climb 2 million barrels in a Bloomberg News survey of analysts.
Crude stockpiles at Cushing, Oklahoma, the biggest U.S. storage hub and the delivery point for WTI contracts, shrank by 286,000 barrels last week to 49 million, according to the Energy Department report. It was a second weekly decrease and the lowest level since the week ended Dec. 14. Total oil inventories were 383 million, 12 percent higher than the five-year average.
The data for total supplies may have been distorted by readings for the U.S. West Coast, which registered the largest decline at 2.75 million barrels. The inventory change in the area is sometimes disregarded by traders because the region’s distribution system is isolated from the rest of the U.S., Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors, said yesterday. Excluding California and the rest of the West Coast, total U.S. stockpiles rose by 1.44 million barrels.
U.S. gasoline inventories slid by 1.5 million barrels last week, the government report showed. They were forecast to fall by 2 million, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate-fuel supplies, including heating oil and diesel, decreased by 672,000 barrels, compared with a projected fall of 1 million in the survey.
To contact the editor responsible for this story: Raj Rajendran at email@example.com