Feb. 27 (Bloomberg) -- Brent crude declined to the lowest level in more than a week, narrowing its premium to West Texas Intermediate to a new 4 1/2 month low.
Futures slipped as much as 0.7 percent in London amid speculation tighter lending in China may crimp economic expansion in the world’s second-largest oil user. European stocks and emerging-market currencies declined for a second day. WTI’s losses were capped after government data yesterday showed crude supplies at Cushing, Oklahoma, the U.S. storage hub, fell by 1.08 million barrels to 34.8 million last week, the lowest level in four months.
“Brent has looked weak the whole morning due to risk aversion and demand concerns,” Carsten Fritsch, an analyst Commerzbank AG in Frankfurt, said by e-mail today. “Declining Cushing stocks and a lower than expected overall inventory build” have caused the WTI-Brent spread to shrink, he said.
Brent for April settlement dropped as much as 72 cents to $108.80 a barrel on the ICE Futures Europe exchange, the lowest since Feb. 17. It traded for $108.89 as of 1:02 p.m. local time. The European crude’s premium to WTI narrowed to as little as $6.31 a barrel on ICE, the smallest gap since Oct. 8.
WTI for April delivery dropped as much as 40 cents to $102.19 a barrel in electronic trading on the New York Mercantile Exchange. The contract climbed 76 cents to $102.59 yesterday, the biggest gain since Feb. 19. The volume of all futures traded was about 30 percent below the 100-day average.
The Stoxx Europe 600 Index slipped 0.7 percent to 335.43 at 1:04 p.m. in London today. A Bloomberg gauge of 20 developing-economy currencies lost 0.1 percent, with Ukraine’s hryvnia weakening 7.7 percent and Turkey’s lira sliding 0.4 percent.
China’s central bank is draining funds from the financial system as lower money-market rates signal ample supplies of the currency amid a government drive to clean up risky lending practices.
WTI is set for the second monthly advance in three months as winter storms bolstered heating demand in the U.S. and inventories shrank at Cushing. TransCanada Corp. began moving crude from the storage hub to Texas on the southern portion of its Keystone XL pipeline in January.
Stockpiles at Cushing, the delivery point for WTI futures, decreased 7.04 million barrels in the four weeks through Feb. 21 to the lowest since Oct. 18, according to the EIA, the Energy Department’s statistical arm.
Distillate inventories expanded by 338,000 barrels last week, compared with a median 1.25 million drop forecast by analysts in a Bloomberg News survey. Gasoline supplies fell by 2.81 million barrels to 230.6 million, the EIA data show.
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