West Texas Intermediate dropped for a fourth day, slipping below $100 a barrel, as the dollar headed for its biggest monthly gain against the euro since last February, curbing the appeal of the commodity. Brent decreased in London.
Futures fell as much as 1.2% in New York to the lowest since July 15. A stronger U.S. currency often dims the appeal of using dollar-priced commodities such as crude for protecting against inflation. WTI (NYMEX:CLQ14) also fell after data yesterday showed U.S. gasoline (NYMEX:RBQ14) supplies rose to the highest level in four months. The U.S. is considering further punitive measures on Russian business to deter President Vladimir Putin’s support for separatists in east Ukraine.
“The U.S. dollar is starting to push higher, that weighs on commodity prices including oil,” Jens Pedersen, an analyst at Bank A/S in Copenhagen, said by e-mail. “Sanctions on Russia have not had an effect on current supplies from Russia,” and this is also weighing on prices, he said.
WTI for September delivery slid as much as $1.18 to $99.09 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.63 at 1:45 p.m. London time. The volume of all futures traded was about 3.2% above the 100-day average for the time of day. Prices are down 5.5% in July, the most in nine months.
Brent (NYMEX:SCQ14) for September settlement fell as much as $1.01, or 1%, to $105.50 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.68 to WTI, from $6.24 yesterday.
The U.S. currency has risen versus all of its 16 major counterparts in July as reports have shown gross domestic product rebounded and durable goods orders increased. The dollar was little changed at $1.3380 per euro at 1:55 p.m. in London.
Rising pressure on Russia, the world’s largest energy exporter, comes after investigators seeking to reach the crash site of Malaysian Air Flight MH17 were blocked again yesterday from going to the area by fighting between pro-Russian rebels and government forces.
U.S. gasoline stockpiles expanded by 365,000 barrels last week to 218.2 million, the Energy Information Administration said yesterday. Average consumption shrank 0.5% over the past four weeks to the lowest level since May, even as the country’s peak driving season started with the Memorial Day holiday on May 26.
Crude inventories dropped 3.7 million barrels to 367.4 million in the week ended July 25, said the EIA, the Energy Department’s statistical arm. Supplies at Cushing, Oklahoma, the delivery point for WTI, decreased by 924,000 barrels to 17.9 million, the lowest since October 2008.
Stockpiles of distillates, a category that includes heating oil and diesel, expanded by 789,000 barrels to 126.7 million, the highest level since September 2013.
“This should be a period of peak demand,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The price action is telling us the world does not have an issue with the supply of crude. Oil at $100 is a big level, and I don’t think it will give it up so quickly.”