WTI Falls to Three-Week Low as U.S. Growth Seen Slowing

West Texas Intermediate crude fell to the lowest level in three weeks, trimming its biggest monthly advance in almost a year, before a government report that may show U.S. economic growth slowed in the second quarter.

Futures dropped by as much as 1.1 percent. U.S. gross domestic product probably expanded at a 1 percent annualized rate from April through June, compared with 1.8 percent in the previous three months, according to a Bloomberg News survey before data are released tomorrow. The nation’s crude inventories shrank for a fifth week, a separate survey showed. Egypt’s Muslim Brotherhood defied threats of a further crackdown on protests, urging a march on security installations.

“There are no expectations of runaway growth,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, who predicts an “exodus” among funds if Brent crude declines to $100. U.S. economic growth “will probably slow down as we move into the fourth,” or last quarter.

WTI for September delivery declined as much as $1.10 to $103.45 a barrel in electronic trading on the New York Mercantile Exchange, the lowest price since July 9, and was at $103.61 as of 1:20 p.m. London time. The volume of all futures traded was 4 percent below the 100-day average. Prices are up 8 percent in July, set for a second monthly gain.

Brent for September settlement slid as much as 53 cents, or 0.5 percent, to $106.92 a barrel on the London-based ICE Futures Europe exchange. Prices have risen 5 percent this month. The European benchmark was at a premium of $3.55 to WTI. The spread widened for a fourth day yesterday to $2.90.

Oil Supplies

U.S. crude stockpiles probably fell by 2.2 million barrels last week to 362 million barrels, the lowest level since January, a Bloomberg survey shows before an Energy Information Administration report tomorrow.

Gasoline inventories dropped by 1.1 million barrels, according to the median estimate of nine analysts. Distillate supplies, a category that includes heating oil and diesel, are expected to have increased by 500,000 barrels.

The American Petroleum Institute in Washington is due to release separate inventory data after 4:30 p.m. local time today. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey.

Economy Softening

The Commerce Department will release its report on second-quarter GDP tomorrow at 8:30 a.m. in Washington. Federal Reserve policy makers, set to meet this week, will evaluate progress in the economy and the job market as they consider trimming monthly bond purchases.

“The U.S. economy looks as though it’s still softening,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “If the GDP number does come in around consensus, the oil price will probably continue to weaken. It’s probably only the events that we’re seeing still rippling around the Middle East that are perhaps keeping WTI in the three figures.”

WTI surged above $100 a barrel on July 3 for the first time since September as Egypt’s political upheaval heightened concern that unrest in the most populous Arab country will spread and disrupt Middle Eastern oil supplies.

Supporters Killed

The call to march by Egypt’s Muslim Brotherhood followed the killing of dozens of deposed President Mohamed Mursi’s supporters by security forces over the weekend. The military, which toppled Mursi on July 3 after nationwide demonstrations, dropped leaflets on Islamist protesters telling them to keep away from the installations and “help us maintain your safety.”

Catherine Ashton, the European Union’s foreign policy chief, visited Mursi for two hours last night and held an “in-depth discussion,” Ashton’s spokeswoman, Maja Kocijancic, said in a Twitter message without providing additional details. Mursi has been held at an undisclosed location by the military-backed interim government since his removal on July 3.

The Middle East accounted for 35 percent of global oil production in the first quarter of this year, according to the International Energy Agency.

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