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WTI Crude Declines Sixth Day in Seven as Japan Economy Slows

August 12, 2013

(For Bloomberg fair value curves, see CFVL <GO>)

 

Aug. 12 (Bloomberg) -- West Texas Intermediate crude fell for the sixth time in seven days as Japan’s economy slowed in the second quarter and the dollar strengthened.

Prices fell as much as 0.8 percent as Japan’s gross domestic product rose an annualized 2.6 percent, down from 3.8 percent the prior quarter, the Cabinet Office said. The dollar gained versus the majority of its 10 most-traded peers, reducing crude’s investment appeal. Bijan Namdar Zanganeh pledged to raise Iran’s output if he becomes the country’s oil minister.

"We had weak GDP data out of Japan," said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. "The strong dollar is probably where some of the pressure is coming from. We are back to the trading band between $103 and $108."

WTI for September delivery slid 76 cents, or 0.7 percent, to $105.21 a barrel at 9:14 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 20 percent below the 100-day average.

Brent for September settlement dropped 60 cents, or 0.6 percent, to $107.62 a barrel on the London-based ICE Futures Europe exchange. Volume was 4.4 percent below the 100-day average. The European benchmark ’s premium to WTI was as little as $1.62, the narrowest on an intraday basis since Aug. 5.

 

Japan’s Economy

 

Second-quarter growth in Japan, the third-largest oil- consuming country after the U.S. and China, was slower than the 3.6 percent gain predicted by 32 economists in a Bloomberg survey. Consumer spending, which accounts for about 60 percent of the economy, contributed 1.9 percentage points to the annualized real growth rate.

The Bloomberg U.S. Dollar Index rose for the first time in seven days before a report tomorrow that may show a fourth straight monthly gain in retail sales, based on the median estimate of 64 economists. An increase might back the case for the Federal Reserve to reduce stimulus.

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