West Texas Intermediate fell for a second day, extending the biggest loss in more than a month as U.S. crude output surged to a 22-year high.
Futures slid as much as 1 percent in New York after dropping 1.7 percent yesterday. U.S. production increased to 7.56 million barrels a day last week, the most since December 1990, according to the Energy Information Administration. German business confidence rose for a third month in July, indicating that Europe’s largest economy is recovering. U.S. durable goods orders climbed.
“The German Ifo index provides signs that euro countries are starting to expand, although there is still a long way to go before we see sustained growth,” said Thina Saltvedt, an analyst at Nordea Bank AG in Oslo. “Although crude has been falling as inventories are up, with the numbers out of Germany and then from the U.S., I can’t see it continuing to fall and I think we have hit the bottom.”
WTI for September delivery declined as much as $1.05 to $104.34 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.64 as of 1:48 p.m. London time. The contract decreased $1.84 to $105.39 yesterday, the lowest closing price since July 11 and the biggest drop since June 20.
Brent for September settlement fell as much as 65 cents, or 0.6 percent, to $106.54 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $2.40 to WTI. Brent slid below the U.S. grade in intraday trading on July 19 for the first time since August 2010. The Brent-WTI premium may widen to $6 “relatively soon,” Credit Suisse Group AG said yesterday.
The Ifo Business Climate Index in Germany advanced to 106.2 for July, up from 105.9 in June and 0.1 higher than forecast, according to data from the IFO Institute. U.S. durable goods orders gained 4.2 percent in June, more than a 1.4 percent median forecast of 79 economists surveyed by Bloomberg.
U.S. crude inventories decreased by 2.8 million barrels last week, data yesterday from the EIA, the Energy Department’s statistical arm, show. That matched the median estimate of 12 analysts in a Bloomberg News survey. Supplies were down for a fourth week, the longest run of declines since August.
The U.S. was the largest oil consumer last year, accounting for about 21 percent of global demand, according to the International Energy Agency.
Stockpiles at Cushing, Oklahoma, the delivery point for New York-traded futures and the nation’s biggest oil-storage hub, fell by 2.1 million barrels, the EIA report showed.
Gasoline inventories slid by 1.4 million barrels, the EIA said. Supplies were forecast to climb by 1.6 million, according to the Bloomberg survey. Distillate stockpiles, a category that includes heating oil and diesel, dropped by 1.2 million, compared with a projected 1.8 million gain.
“It seems that investors keep ignoring the oil fundamentals, despite the recent U.S. oil inventories being fairly optimistic,” said Myrto Sokou, an analyst at London-based Sucden Financial Ltd.
WTI is extending losses after a measure of technical momentum declined. On the daily chart, the moving average convergence-divergence indicator yesterday sank below its signal line for the first time this month, data compiled by Bloomberg show. Investors typically sell contracts on a MACD crossover.
Tropical Storm Dorian moved across the Atlantic on a westward path that may take it to the Caribbean Sea, the U.S. National Hurricane Center said. The system, with top sustained winds of 60 miles (95 kilometers) per hour, was about 700 miles west of the Cape Verde Islands, an advisory issued at 5 a.m. New York time showed. It was moving west-northwest at 17 mph. Weather projection shows that the storm will pass north of Puerto Rico on Monday or Tuesday.