WTI Retreats from 14-Month High as Supply Concern Eases

West Texas Intermediate oil retreated from the highest level in 14 months as the ouster of Egypt’s president without widespread violence and continued shipments through the Suez Canal eased concern of a supply disruption.

Futures fell as much as 0.5 percent in New York after advancing for a third day yesterday. Egypt’s army forced Mohamed Mursi from power a year after his election, and a military-appointed interim president, Adly Mansour, was sworn in. The political turmoil hasn’t interrupted flows through Suez or a pipeline running through the most populous Arab country.

“The situation eases somewhat after the toppling of Mursi, which leads to moderate downward pressure on prices,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “But it is still too early to say that the situation is improving significantly, hence, supply risks will continue to lend support to prices.”

WTI for August delivery was at $101.12 a barrel, down 12 cents, in electronic trading on the New York Mercantile Exchange at 1:14 p.m. local time. The volume of all WTI futures traded was 87 percent below the 100-day average. The U.S. benchmark crude rose $1.64, or 1.7 percent, to $101.24 yesterday, the highest settlement and first above $100 since May 3, 2012.

There is no floor trading in New York today because of the U.S. Independence Day holiday. Electronic transactions will be booked tomorrow for settlement purposes.

Loading Programs

Brent for August settlement lost 24 cents to trade at $105.52 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $4.40 to WTI contracts, from $4.52 yesterday. The spread was $4.40 on July 2, the narrowest based on closing prices since Jan. 4, 2011.

North Sea oil field operators will release August loading programs for various grades of crude today and tomorrow, including the four varieties that make up the Dated Brent price benchmark.

The Bank of England held its benchmark interest rate steady today, in line with a Bloomberg survey of economists, in its first meeting since the appointment of Governor Mark Carney. The European Central Bank also kept interest rates unchanged today, as forecast by a Bloomberg economist survey.

“Thin trading volumes due to the U.S. holiday and the ECB meeting can add to volatility in prices,” Fritsch said.

Egypt Unrest

Egypt’s army ousted Mursi, the country’s first democratically elected civilian leader, saying it sought stability. The televised announcement yesterday by Defense Minister Abdelfatah al-Seesi drew cheers from the hundreds of thousands of people gathered in Cairo’s Tahrir Square and across the country the past four days. U.S. President Barack Obama said he’s “deeply concerned” and urged the Egyptian military to return to an elected civilian government as soon as possible.

Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which a combined 2.24 million barrels a day of oil was shipped from the Red Sea to Europe and North America in 2011, according to the EIA. The Middle East accounted for 35 percent of global oil output in the first quarter of this year, according to the International Energy Agency’s latest monthly oil market report.

Traffic at the Suez Canal was normal and the waterway was guarded by military and police, Tarek Hassanein, spokesman for the Suez Canal Authority, said yesterday in an e-mailed statement.

Fuel Supplies

U.S. crude inventories fell by 10.3 million barrels last week, according to the Energy Information Administration. They were projected to decline by 2.25 million, a Bloomberg News survey showed.

U.S. gasoline inventories slid by 1.7 million barrels in the week ended June 28, said the EIA, the Energy Department’s statistical arm. Stockpiles were forecast to climb by 700,000 barrels, according to the median estimate of 11 analysts surveyed by Bloomberg.

Refineries operated at 92.2 percent of capacity last week, up 2 percentage points from the prior period, the EIA report shows. That’s the highest rate since August. Plants typically boost output this time of year to meet rising U.S. summer demand for motor fuel.

“The drop in gasoline stocks despite higher refinery utilization was bullish in particular,” Fritsch said. U.S. oil demand “seems improving, but that is usual for this time of the year.”

Distillate stockpiles, including heating oil and diesel, decreased by 2.4 million barrels, compared with a projected 1 million increase in the survey.

WTI’s advance is stalling as prices may have risen too quickly for further gains to be sustainable. The 14-day relative strength index was at 68.2 yesterday, the highest since Feb. 1, according to data compiled by Bloomberg. Investors typically sell contracts when the reading is above 70, which signals a market is overbought.

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