Brent crude declines below $100 a barrel; WTI is little changed

German Outlook

The ZEW Center for European Economic Research in Mannheim, Germany, said its German index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 36.3 from 48.5 in March. Economists surveyed by Bloomberg forecast a drop to 41.

Factory output in the U.S. fell 0.1% in March, figures from the Federal Reserve showed today in Washington, compared with 0.1% gain forecast in a Bloomberg survey.

China’s gross domestic product in the first quarter rose 7.7% from a year earlier, the Beijing-based National Bureau of Statistics said yesterday. That compares with the 8% median forecast in a Bloomberg survey and 7.9% in the prior quarter.

The International Energy Agency, the Organization of Petroleum Exporting Countries and the EIA cut their forecasts for 2013 global oil demand last week.

‘Important Marker’

“Falling below $100 was an important marker,” said Soozhana Choi, Deutsche Bank AG’s head of energy research in Washington. “The disappointing Chinese GDP data yesterday was a big catalyst, but Brent was already falling because of the downgrades in demand last week.”

U.S. gasoline stockpiles probably declined by 850,000 barrels, according to the median estimate of 10 analysts in the Bloomberg survey before tomorrow’s Energy Information Administration report.

The industry-funded American Petroleum Institute will release separate inventory figures today. The API collects stockpile information on a voluntary basis while the government requires that reports be filed with the EIA, the Energy Department’s statistical unit, for its weekly survey.

“The market is responding to a weaker macroeconomic outlook and not the fundamentals of oil,” said Julius Walker, global energy markets strategist at UBS Securities LLC. “U.S. crude supplies have been rising but product stocks are very tight.”

OPEC Basket

The basket of 12 crude grades used as a reference by OPEC also fell below $100 for the first time since July. The basket was at $98.56 yesterday, according to an e-mail today from the group’s Vienna-based secretariat.

The decline brings prices in line with the target cited by Ali Al-Naimi, oil minister of Saudi Arabia, the world’s biggest crude exporter, who has described $100 as “reasonable” for consumers and producers.

“The Saudis have suggested that $100 is a good price,” O’Grady said. “Now that we’ve dipped below $100, you should start to hear rattling from some members of the cartel. There will be calls to cut production to boost prices.”

Implied volatility for at-the-money WTI options expiring in June was 24.9%, down from 25.8% yesterday.

Electronic trading volume on the Nymex was 636,345 contracts as of 2:37 p.m. It totaled 858,007 contracts yesterday, 47% above the three-month average. Open interest was 1.78 million contracts.

Bloomberg News

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