Brent Crude Drops Third Day as Germany Nears Recession

Brent crude fell for a third day, heading for the lowest closing price since June 2012 on signs the German economy is on the edge of recession. West Texas Intermediate was down in New York.

Futures declined as much as 0.9 percent in London, reversing an earlier gain. The growth outlook for Europe’s biggest economy was cut in a report by four economic institutes. U.S. crude inventories expanded by 5 million barrels last week, the Energy Information Administration reported yesterday, exceeding a 2 million increase projected in a Bloomberg News survey. U.S. jobless claims fell.

“The negative sentiment continues to weigh on the price with a supply surplus” and weaker data from Germany, Eugen Weinberg, head of commodities research at Frankfurt-based Commerzbank AG, said by e-mail. “We have witnessed a similar trading pattern over the last few days, with a stronger start and then relatively sharp drops in the afternoon.”

Brent for November delivery dropped as much as 79 cents to $90.59 a barrel and was at $90.79 at 1:33 p.m. on the ICE Futures Europe exchange in London. The contract slid by 73 cents to $91.38 yesterday, more than 20 percent below its June peak, meeting a common definition of a bear market. The volume of all futures traded was 31 percent above the 100-day average for the time of day.

WTI for November settlement was down 40 cents at $86.91 a barrel on the New York Mercantile Exchange. The European benchmark crude traded at a premium of $3.88 to WTI on ICE. The spread closed at $4.07 yesterday, the widest in two weeks.

German Slowdown

The German economic institutes cut the 2014 growth outlook for Europe’s biggest economy to 1.3 percent from a forecast of 1.9 percent in April. The economy, which shrank 0.2 percent in the second quarter from the previous three months, posted zero growth in the third and will expand 0.1 percent in the fourth, according to the outlook. The DIW, IWH, IfO and and RWI institutes advise the German government and jointly compiled the report.

The Bank of England kept its key interest rate at a record low of 0.5 percent at its Monetary Policy Committee meeting today, as the euro-area economy stumbled and domestic growth showed signs of losing momentum.

U.S. Data

The number of Americans filing applications for unemployment benefits fell unexpectedly in the week ended Oct. 4, declining by 1,000 to 287,000, a Labor Department report showed today. The median forecast of 50 economists surveyed by Bloomberg called for 295,000.

U.S. oil production increased to 8.88 million barrels a day in the week ended Oct. 3, the most since March 1986, according to the EIA, the Energy Department’s statistical arm. Crude inventories expanded to 361.7 million, compared with a five-year average of 355 million.

The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, pumped 30.935 million barrels a day in September, a Bloomberg survey of producers and analysts show. That’s the highest level in 13 months. The group publishes its monthly oil-market report tomorrow.

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