Brent crude dropped after German industrial output unexpectedly fell, signaling an uneven recovery in Europe’s largest economy.
The oil’s premium over West Texas Intermediate shrank for the fourth time in five days. Futures slid as much as 1.5 percent as the Economy Ministry in Berlin said production decreased 1.2 percent in October after a 0.7 percent decline the previous month.
The Brent-WTI spread has narrowed by more than $5 in a week as U.S. crude inventories declined and TransCanada Corp. (TRP) said it expected to move oil in January to the Gulf Coast on the Keystone XL pipeline.
“There has been optimism about both the American and European economies, but these German numbers are raising concern,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion.
“The Brent-WTI issue has almost become the most important issue in the market.” Brent crude for January settlement decreased $1.40, or 1.3 percent, to $110.21 a barrel at 11:15 a.m. New York time on the London-based ICE Futures Europe exchange.
The volume of all futures traded 2.2 percent above the 100-day average. WTI for January delivery gained 9 cents to $97.74 a barrel on the New York Mercantile Exchange.
Volume was 33 percent below the average. Futures climbed to $97.65 on Dec. 6, the highest settlement since Oct. 29.
The European benchmark traded at a $12.47 premium to WTI, heading for the narrowest close since Nov. 11.The spread tightened to $12.49 in intraday trading.
North Sea
Economists had predicted a gain of 0.7 percent in German output, according to the median of 38 estimates in a Bloomberg survey.
(GRIPIMOM) Growth in the country risk being curbed by weakness in the 17-nation euro area, its biggest trading partner, leaving it more reliant on domestic demand.
Germany is the world’s eighth largest oil-consuming country, according to the Energy Information Administration, the statistical arm of the U.S. Energy Department.
Daily exports of 11 main grades of North Sea crude for loading in January will increase by 3.4 percent, according to loading programs obtained by Bloomberg.
Shipments of Brent, Forties, Oseberg, Ekofisk, Statfjord, Gullfaks, Alvheim, Aasgard, DUC, Grane and Troll blends will total about 64.1 million barrels, or about 2.07 million barrels a day. That compares with about 2 million barrels in revised data for December.
“The North Sea production is coming back and it should put more supplies in the marketplace,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “That’s going to pressure Brent. The Brent-WTI spread continues to come in.”
U.S. Supplies
U.S. crude supplies fell 5.59 million barrels to 385.8 million in the week ended Nov. 28, the EIA, said Dec. 4. Refineries operated at 92.4 percent of capacity, the most since September.
Utilization rates usually pick up in December after maintenance is performed during the lull in fuel use between the summer driving and the winter heating periods.
WTI surged 5.3 percent last week on TransCanada’s plans to start part of its Keystone pipeline to the Gulf Coast from Cushing, Oklahoma.
The Calgary-based company estimates it will begin taking receipts and delivering oil in mid- to late January, a bulletin shows. The link ending at Port Arthur, Texas, will have a capacity of 700,000 barrels a day.
bloomberg.com
The oil’s premium over West Texas Intermediate shrank for the fourth time in five days. Futures slid as much as 1.5 percent as the Economy Ministry in Berlin said production decreased 1.2 percent in October after a 0.7 percent decline the previous month.
The Brent-WTI spread has narrowed by more than $5 in a week as U.S. crude inventories declined and TransCanada Corp. (TRP) said it expected to move oil in January to the Gulf Coast on the Keystone XL pipeline.
“There has been optimism about both the American and European economies, but these German numbers are raising concern,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion.
“The Brent-WTI issue has almost become the most important issue in the market.” Brent crude for January settlement decreased $1.40, or 1.3 percent, to $110.21 a barrel at 11:15 a.m. New York time on the London-based ICE Futures Europe exchange.
The volume of all futures traded 2.2 percent above the 100-day average. WTI for January delivery gained 9 cents to $97.74 a barrel on the New York Mercantile Exchange.
Volume was 33 percent below the average. Futures climbed to $97.65 on Dec. 6, the highest settlement since Oct. 29.
The European benchmark traded at a $12.47 premium to WTI, heading for the narrowest close since Nov. 11.The spread tightened to $12.49 in intraday trading.
North Sea
Economists had predicted a gain of 0.7 percent in German output, according to the median of 38 estimates in a Bloomberg survey.
(GRIPIMOM) Growth in the country risk being curbed by weakness in the 17-nation euro area, its biggest trading partner, leaving it more reliant on domestic demand.
Germany is the world’s eighth largest oil-consuming country, according to the Energy Information Administration, the statistical arm of the U.S. Energy Department.
Daily exports of 11 main grades of North Sea crude for loading in January will increase by 3.4 percent, according to loading programs obtained by Bloomberg.
Shipments of Brent, Forties, Oseberg, Ekofisk, Statfjord, Gullfaks, Alvheim, Aasgard, DUC, Grane and Troll blends will total about 64.1 million barrels, or about 2.07 million barrels a day. That compares with about 2 million barrels in revised data for December.
“The North Sea production is coming back and it should put more supplies in the marketplace,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “That’s going to pressure Brent. The Brent-WTI spread continues to come in.”
U.S. Supplies
U.S. crude supplies fell 5.59 million barrels to 385.8 million in the week ended Nov. 28, the EIA, said Dec. 4. Refineries operated at 92.4 percent of capacity, the most since September.
Utilization rates usually pick up in December after maintenance is performed during the lull in fuel use between the summer driving and the winter heating periods.
WTI surged 5.3 percent last week on TransCanada’s plans to start part of its Keystone pipeline to the Gulf Coast from Cushing, Oklahoma.
The Calgary-based company estimates it will begin taking receipts and delivering oil in mid- to late January, a bulletin shows. The link ending at Port Arthur, Texas, will have a capacity of 700,000 barrels a day.
bloomberg.com
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