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Old June 10th, 2013, 01:00 PM
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Crude Declines From Two-Week High on China Data

By Moming Zhou - Jun 10, 2013 10:41 AM ET
West Texas Intermediate crude slid from a two-week high after industrial production slowed in China, the world’s second-biggest oil-consuming country.
Prices fell as much as 0.9 percent as Chinese output grew 9.2 percent in May, compared with 9.3 percent in April, the National Bureau of Statistics said yesterday. The pace was less than the 9.4 percent estimate in a Bloomberg survey of economists. Futures also decreased as production resumed at the North Sea Buzzard oil field, the largest contributor to the Forties crude grade, a component of the Brent benchmark.
“The Chinese economic news is bearish,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “With the run-up we had, people are just feeling that maybe it’s a little too much given the economic situation especially in China.”
WTI for July delivery slid 28 cents, or 0.3 percent, to $95.75 a barrel at 10:40 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 5.8 percent below the 100-day average. Prices advanced $1.27 to $96.03 a barrel on June 7, the highest close since May 21.
Brent for July settlement dropped 35 cents, or 0.3 percent, to $104.21 a barrel on the London-based ICE Futures Europe exchange. Volume was 8.6 percent below the 100-day average.
China’s commercial crude inventories climbed to a three-month high of 28.68 million metric tons (210.2 million barrels) in April, according to Bloomberg calculations based on data released by the China Oil, Gas & Petrochemicals newsletter, published by the official Xinhua News Agency.
Chinese Consumption

China used 9.76 million barrels a day, or 11 percent of world’s oil, in 2011, making it the second-biggest user after the U.S., which used 18.8 million barrels a day, or 21 percent, according to BP Plc (BP/)’s Statistical Review of World Energy.
U.S. crude stockpiles reached an 82-year high of 397.6 million barrels in the week ended May 24 before dropping 1.6 percent the following week, according to the Energy Information Administration, the statistical arm of the Energy Department. Gasoline demand slid 1.5 percent in the week ended May 31.
“There are a lot of supplies out there, and demand is relatively subdued,” said Rich Ilczyszyn, chief market strategist and founder of commodities trading firm Iitrader.com in Chicago. “There is no reason for oil to be this high. Oil really got ahead of itself.”
Crude futures gained 4.4 percent in the five days ended June 7, the biggest weekly increase since April 26.
Buzzard Resumes

The Buzzard field returned to approximately full pumping rates of about 208,000 barrels a day during the past two days after a halt June 6 because of an equipment failure, according to two people with knowledge of the matter who asked not to be identified. Forties blend sets the value of Dated Brent, the benchmark used to price more than half of the world’s crude.
Nordea Bank AG trimmed its 2013 estimate for Brent crude to $109 a barrel from $111 and cut its 2014 forecast to $111 from $115 because of disappointing demand and expanding supplies outside the Organization of Petroleum Exporting Countries, according to an e-mailed report from the Oslo-based company.
Crude also dropped as the Dollar Index, which measures the greenback against six other major currencies including the euro and the yen, rose as much as 0.5 percent. A stronger dollar decreases oil’s appeal as an investment alternative.
“You definitely have the dollar stronger and that’s going to blow headwinds in oil,” Ilczyszyn said.
Money managers, including hedge funds, commodity pools and commodity-trading advisers, cut bets on rising WTI prices in the seven days ended June 4, according to the U.S. Commodity Futures Trading Commission. Net-long positions dropped by 5,404 futures and options combined, or 2.5 percent, to 212,127, the CFTC said in its June 7 Commitments of Traders report.
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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