crude oil investing

crude oil futures

May 22nd, 2014

Crude oil futures dropped from a one-month high as more Americans than projected filed applications for unemployment benefits last week. Brent slid.

WTI fell 0.3 percent after the Labor Department reported jobless claims increased to 326,000 in the week ended May 17, more than the 310,000 median forecast by economists surveyed by Bloomberg. It advanced $1.63 yesterday on a government report that U.S. supplies tumbled as imports dropped. Brent decreased less than WTI on stronger Chinese manufacturing.

“The rally is looking a little overextended, and unless we continue to see good economic data, the market is going to meet greater and greater resistance,” Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said by phone. “Does the market have enough momentum to go up without another week of sizable drawdowns? I am not convinced.”

WTI for July delivery slid 33 cents to settle at $103.74 a barrel on the New York Mercantile Exchange. Front-month futures climbed to $104.07 yesterday, a one-month high. Volume was 30 percent below the 100-day average at 3:20 p.m.

Brent for July settlement fell 19 cents to $110.36 a barrel on the London-based ICE Futures Europe exchange. The volume of all contracts traded was 8.2 percent above the 100-day average. Brent was at a $6.62 premium to WTI. The spread closed at $6.48 yesterday, the narrowest in a month.

Crude Oil Futures: Jobless Claims

The jobless claims figure for a week earlier was revised up to 298,000 filings, the Labor Department said. The four-week moving average, a less volatile measure than the weekly figures, fell to 322,500 from 323,500.

“The U.S. number was bearish for WTI and that kind of tipped the balance,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “The Chinese data is overall bullish for Brent.”

U.S. crude stockpiles decreased 7.23 million barrels to 391.3 million in the week to May 16, the Energy Information Administration reported yesterday. Crude imports fell 658,000 barrels a day as U.S. output climbed to a 28-year high.

“A large part of yesterday’s inventory draw was due to the drop in imports,” McGillian said.

Brent climbed as much as 0.4 percent in intraday trading after a preliminary Chinese purchasing managers’ index from HSBC Holdings Plc (HSBA) and Markit Economics increased to 49.7 in May, the most in five months and exceeding the 48.3 median estimate of analysts surveyed by Bloomberg. The number remained below the expansion-contraction line of 50.

Crude Oil Futures: Chinese Manufacturing

“China’s manufacturing is now only barely contracting,” and today’s data are a welcome improvement, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas (BNP) in London, said by e-mail.

A similar figure from the National Bureau of Statistics and China Federation of Logistics and Purchasing will be published June 1. That gauge rose to 50.4 in April from 50.3 in March.

“The jobless claims are kind of offsetting the supportive China data,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago said by phone. “We’ve gone up a lot and the market is reluctant to move higher right now.”

- Moming Zhou in New York at Bloomberg.