Oil Drops on Weaker European Indicators

Brent crude fell to a three-week low on concern a weaker European economy will reduce demand and as Libya’s oil production gained. West Texas Intermediate’s discount to Brent narrowed before weekly inventory data.

The European benchmark slipped for a third day. The Euro-region unemployment rate stayed near a record high in April, Luxembourg-based Eurostat reported. Libya’s oil output rose to 162,000 barrels a day, Mohamed Elharari, a spokesman for National Oil Corp., said today. U.S. crude supplies may have dropped 1 million barrels last week, according to a Bloomberg survey before a government report tomorrow.

“We are seeing a weak fundamental picture,” Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said by phone. “More Libyan oil is coming online and it’s weighing on the market. The market is waiting for tomorrow’s inventory report.”

Brent for July settlement declined 22 cents, or 0.2 percent, to $108.61 a barrel at 9:09 a.m. New York time on the London-based ICE Futures Europe exchange. It dropped to $108.32, the lowest intraday level since May 13. The volume of all futures was about 27 percent above the 100-day average for the time of day.

WTI for July delivery slid 7 cents to $102.40 a barrel on the New York Mercantile Exchange, on volume that was 34 percent below the 100-day average. WTI traded at a $6.21 discount to Brent, the narrowest in a week.

via Bloomberg

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