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WTI crude falls below $95 first time since June on supply surge

By Mark Shenk, Bloomberg

November 1, 2013 • Reprints

West Texas Intermediate crude fell below $95 (NYMEX:CLZ13) a barrel for the first time since June on surging U.S. stockpiles and as the dollar gained versus the euro, curbing commodity demand from investors.

Futures capped a fourth straight weekly decline, the longest stretch of decreases in more than a year. A U.S. government report on Oct. 30 showed that supplies advanced a sixth week. The dollar climbed against the euro for a fifth day on speculation that the European Central Bank will reduce interest rates to spur economic growth.

“The supply side has overtaken everything else,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There’s plenty of oil around and the market is in breakdown mode. We’re also down because the dollar is up against the euro on expectations the ECB will cut interest rates, which is extremely bearish for the market.”

WTI for December delivery dropped $1.77, or 1.8% to $94.61 a barrel on the New York Mercantile Exchange. It was the lowest settlement since June 21. Prices slipped 3.3% this week and fell 5.8% in October. The volume of all futures traded was 4.3% below the 100-day average at 3:31 p.m.

Brent for December settlement decreased $2.93, or 2.7%, to end the session at $105.91 a barrel on the London- based ICE Futures Europe exchange. It was the lowest closing price since July 4. Volume was 29% above the 100-day average. The European benchmark crude traded at an $11.30 premium to WTI, down from $12.46 at yesterday’s close.

‘Moving Together’

“Both WTI and Brent are moving together now, ending what had been a tug-of-war between falling WTI and steady Brent,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The euro has weakened and the dollar is stronger, which is putting pressure on commodities in general.”

U.S. crude inventories climbed by 4.09 million barrels to 383.9 million last week, the most since June, data from the Energy Information Administration showed. Stockpiles at Cushing, Oklahoma, where WTI is delivered, advanced 2.18 million barrels to 35.5 million, a two-month high, according to the EIA, the Energy Department’s statistical arm.

Crude production declined 43,000 barrels a day to 7.85 million last week. Output had surged to the most since 1989 as the combination of horizontal drilling and hydraulic fracturing, or fracking, unlocked supplies trapped in shale formations in the central U.S.

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Related Terms
oil 6597Bloomberg 5254Oil 4706energy 3807commodities 3439European Central Bank 3208Energies 2981Organization of Petroleum-Exporting Countries 1337manufacturing 1315U.S. government 1118New York Mercantile Exchange 1061WTI 731Phil Flynn 657Brent 639Energy Information Administration 621Bank of America Corp. 596Department of Energy 546Oklahoma 523Arizona 473UBS AG 455Institute for Supply Management 296ICE Futures Europe 251Royal Bank of Scotland Group Plc 206Prices 193oil supplies 152Price Futures Group 87John Kilduff 54Again Capital LLC 53Tim Evans 33Citi Futures Perspective 29Spread 23oil ministry 21Asim Jihad 9Ibrahim Al Awami 6premium 4

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