WTI Crude Gains After Quarterly Drop Amid Egypt Protests

West Texas Intermediate rose, snapping last quarter’s decline, amid concern than mass protests against President Mohamed Mursi of Egypt, the largest Arab nation, might spread and affect Middle Eastern oil supply.

Futures gained as much as 1 percent in New York. At least eight people were killed in clashes near the Cairo headquarters of Mursi’s Muslim Brotherhood, and part of the Islamist organization’s building was set on fire, government officials and police said today. WTI fell earlier as much as 0.5 percent as China’s Purchasing Managers Index dropped to 50.1 last month, from 50.8 in May. U.S. crude rose 5 percent in June even as stockpiles increased for three weeks, government data showed.

“Today’s rise came as a bit of a geopolitical lift,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S, said by telephone from Copenhagen, adding that prices could continue to increase on concern that unrest in Egypt may spread in the oil-producing region. “The main drivers now are geopolitics and the expected build-up in demand in the third quarter.”

WTI for August delivery was at $97.51 a barrel in electronic trading on the New York Mercantile Exchange, up 95 cents, at 1:10 p.m. London time. The volume of all futures traded was about 23 percent below the 100-day average. The contract decreased 49 cents to $96.56 on June 28, capping a 0.7 percent loss for the second quarter.

Moving Average

Brent for August settlement was at $103.03 a barrel, up 87 cents, on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $5.51 to WTI futures. The spread was $5.60 on June 28, the narrowest based on closing prices since January 2011.

Brent, which dropped 7.1 percent in the second quarter, may extend its decline because of technical resistance, according to data compiled by Bloomberg. Futures traded higher than the 50-day moving average the past two days without settling above it. This indicator is at about $103.20 a barrel today. Investors typically sell contracts when prices fail to breach chart-resistance levels.

In Egypt, protesters stormed the Muslim Brotherhood’s main Cairo headquarters, setting ablaze the first floor hours after hundreds of thousands poured into Egypt’s streets demanding Mursi step down. The attack on the group that fielded Mursi for office followed a night of clashes that killed at least eight people and injured 45, according to South Cairo Prosecution official Tamer El-Arabi.

Fatal Clashes

The protests come amid continuous armed conflict in Syria, raising concern that tensions may spread to larger oil-exporting nations in the Middle East, which collectively accounts for 34 percent of world oil supply.

China’s manufacturing index, released today by the National Bureau of Statistics and China Federation of Logistics and Purchasing, matched the median forecast of 33 economists surveyed by Bloomberg News. Slowing gains add to odds that Li Keqiang may become the first Chinese premier to miss an annual growth target since the Asian financial crisis in 1998.

“The data out of China is showing slowing,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney, who predicts investors may sell WTI contracts at about $98.50 a barrel. “Sentiment is down and inventories are building. Oil shouldn’t be at these levels.”

China Demand

China accounted for 11 percent of global oil demand last year, compared with 21 percent for the U.S., the biggest user, according to the International Energy Agency’s monthly oil market report published on June 12.

North Sea production at the Buzzard field operated by Nexen Inc. is said to be running at rates as much as 25 percent less than normal, according to two people with knowledge of the matter. The field is producing between 150,000 barrels and 170,000 barrels a day, said the people, who asked not to be identified because the information is confidential.

Hedge funds and other money managers cut bullish bets on Brent crude to the lowest level in six weeks, according to data from ICE Futures Europe. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 136,809 lots in the week ended June 25, the London-based exchange said today in its weekly Commitments of Traders report.

Net-long positions in WTI held by money managers, including hedge funds, commodity pools and commodity-trading advisers, dropped by 30,045 futures and options combined, or 11 percent, to 232,194, the U.S. Commodity Futures Trading Commission said in its Commitments of Traders report on June 28. The decline was the most since February.

Oil supply from the Organization of Petroleum Exporting Countries fell in June for the first time in five months. Production slid 227,000 barrels to an average 30.697 million barrels a day, from a revised 30.924 million in May, according to a Bloomberg survey last week of oil companies, producers and analysts. OPEC’s 12 members pump about 40 percent of the world’s crude.

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