Brent crude fell below $100 a barrel for the first time since July amid signs global economic growth may slow, curbing fuel demand. West Texas Intermediate declined to a four-month low on speculation U.S. supplies rose.
Brent slid as much as 2.6 percent to $98 a barrel, while WTI dropped to the lowest intraday price since Dec. 14. German investor confidence declined more than economists forecast in April. U.S. crude stockpiles probably climbed 1.5 million barrels last week to 390.4 million, the highest since July 1990, according to a Bloomberg survey before data tomorrow. Iran was hit by a 7.8-magnitude earthquake centered in the eastern region near the border with Pakistan and felt as far away as Abu Dhabi.
“As with many times in the past, oil has been used as the tool to express concerns about the macro economy and we are in the same situation now,” said Amrita Sen, chief oil market analyst at Energy Aspects Ltd., a research company in London, who predicted on April 8 that Brent may soon drop to $100. “Brent has been under pressure due to an improvement in supplies and a lack of demand.”
Brent for June settlement fell as much as $2.63 on the London-based ICE Futures Europe exchange, and recovered to $99.80 as of 1:25 p.m. local time. The volume of all futures traded was 70 percent higher than the 100-day average for the time of day. Prices are down 10 percent this year after four annual gains. The front-month European benchmark grade was at a premium of $11.01 to WTI.
WTI for May delivery slipped as much as $2.65 to $86.06 a barrel in electronic trading on the New York Mercantile Exchange. Prices are down a fourth day, the longest run of declines this year. The volume of all futures traded was more than twice the 100-day average. The contract fell $2.58 to $88.71 yesterday, the lowest close since Dec. 24.
The measurement of the earthquake in Iran was reported by the U.S. Geological Survey, which said it struck at about 3:14 p.m. local time. Iran’s state television said its epicenter was in the eastern province of Sistan and Baluchistan. There were no immediate reports about casualties.
The basket of 12 crude grades used as a reference by the Organization of Petroleum Exporting Countries also fell below $100 for the first time since July. The basket was at $98.56 yesterday, according to an e-mail today from the group’s Vienna-based secretariat. It’s the first time the average has slipped below $100 since July 16.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 36.3 from a three-year high of 48.5 in March. Economists forecast a drop to 41, according to the median of 40 estimates in a Bloomberg News survey.
U.S. gasoline stockpiles probably fell by 800,000 barrels, according to the median estimate of seven analysts in the Bloomberg survey before tomorrow’s report from the Energy Information Administration. Distillate supplies, a category that includes heating oil and diesel, probably declined 500,000 barrels, the survey shows.
The industry-funded American Petroleum Institute will release separate inventory figures today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistics unit, for its weekly survey.
Brent’s decline may stall as technical indicators show prices may be falling too quickly for further losses to be sustainable. On the weekly chart, the relative strength index is approaching 30, a reading that would signal futures are oversold. Brent rebounded from below $90 a barrel in June 2012 after the RSI dropped to 25.4. It is also reaching long-term support along the 200-week average, around $97.70. Buy orders tend to be clustered near chart-support levels.