West Texas Intermediate crude tumbled as more Americans than forecast filed for unemployment benefits and after gaining for the first time in four days as a measure of China’s economic recovery topped forecasts.
Futures dropped after rising as much as 0.9 percent in New York. U.S. jobless claims fell less than estimated last week, while the August trade deficit was little changed. A preliminary index of manufacturing in China, the world’s second-biggest oil user, advanced to 50.9 for October, beating the median estimate of 50.4 in a Bloomberg News survey of economists. Central banks in Norway and Sweden said today they’ll leave rates on hold.
“We’ve been hot and cold on China all week; even with slower growth they have been building their strategic crude reserves and will continue doing so, supporting demand,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by telephone from Moscow. “The Brent-WTI spread has also been very volatile and created some opportunities. We’d seen that widen out again, so people may be dipping their toes back in.”
WTI for December delivery fell as much as 0.8 percent to $96.11 at 2:16 p.m. London time, after climbing as much as 83 cents to $97.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract slid 1.5 percent yesterday to $96.86, the lowest close since June 28. It lost 3.9 percent over the previous three days and is up 5.3 percent for the year.
Brent for December settlement dropped as much as 70 cents to $107.10 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a $10.61 premium to WTI. The spread narrowed for the first time in four days yesterday to $10.94, after earlier this week reaching the highest since April.
The China preliminary Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics is higher than the final level of 50.2 for last month. Readings above 50 indicate expansion. The National Bureau of Statistics will publish the government’s manufacturing gauge, with a larger sample size, on Nov. 1.
China will account for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., according to forecasts from the International Energy Agency.
U.S. jobless claims fell by 12,000 last week, to 350,000 in the seven days ended Oct. 19, according to Labor Department data released today. Claims exceeded the 340,000 forecast in a Bloomberg survey of 48 economists. The August trade deficit was $38.8 billion compared with $38.6 billion in July, the Commerce Department reported separately today in Washington.
WTI’s 14-day relative strength index dropped to 30.2 yesterday, the lowest level since April 17, data compiled by Bloomberg show. Today’s reading is at about 30.4. Investors typically buy contracts when the RSI declines below 30, which signals prices may rebound.
“The market looks technically oversold,” said Mark Keenan, a cross-commodity research strategist at Societe Generale SA in Singapore.
Norway’s Norges Bank left its benchmark interest rate unchanged at 1.5 percent for a 10th meeting as a deflating housing market in Scandinavia’s richest economy removes pressure to tighten policy. Sweden’s central bank, the Riksbank, left its main rate at 1 percent for a fifth meeting and signaled it may keep rates on hold longer than previously assessed.
All but one of the 16 economists surveyed by Bloomberg correctly forecast the Norwegian decision and all 17 economists surveyed before the Swedish announcement correctly forecast that decision. The Federal Reserve delayed a pullback in asset purchases, saying last month it would continue purchases of $85 billion of bonds a month.
U.S. crude inventories rose by 5.2 million barrels in the week ended Oct. 18, according to a report from the Energy Information Administration yesterday. That’s more than a median increase of 3 million estimated by analysts in a separate Bloomberg survey. Supplies climbed to 379.8 million barrels, the highest level since June 28.
Crude stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub and the delivery point for WTI futures, climbed by 358,000 barrels for a second weekly gain, said the EIA, the Energy Department’s statistical arm.
Gasoline inventories slid by 1.8 million barrels last week, the report showed. They were forecast to decrease by 1 million in the Bloomberg survey. Distillates, including heating oil and diesel, rose by 1.5 million barrels, against a projected drop of 1.8 million.