(For Bloomberg fair value curves, see CFVL <GO>)
July 24 (Bloomberg) -- West Texas Intermediate crude fell the most in more than a month as U.S. output surged to a 22-year high last week and Chinese manufacturing contracted more than economists estimated.
Futures fell as much as 2.2 percent after the Energy Information Administration said crude production rose 0.9 percent to 7.56 million barrels a day, the most since December 1990. Crude and fuel supplies declined, the report showed. The HSBC Holdings Plc and Markit Economics China manufacturing gauge came in at 47.7, according to a preliminary survey of purchasing managers. Analysts surveyed by Bloomberg forecast 48.2.
"There were good-sized supply draws but we still have a surplus," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "We aren’t going to see a deficit anytime soon. The market has been paying a lot of attention to China recently so the weak Chinese data is also relevant."
WTI oil for September delivery slipped $2, or 1.9 percent, to $105.23 a barrel at 1:58 p.m. on the New York Mercantile Exchange, heading for the biggest decline since June 20. The volume of all futures traded was near the 100-day average for the time of day. Prices have advanced 9 percent this month and are up 15 percent this year.
Brent crude for September settlement dropped $1.59, or 1.5 percent, to $106.83 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 13 percent below the 100-day average. The European benchmark grade traded at a $1.60 premium to WTI, up from $1.19 yesterday. Brent slid below the U.S. grade in intraday trading on July 19 for the first time since August 2010.
U.S. crude production has surged as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in the central part of the country.
Crude stockpiles decreased 29.9 million barrels in the four weeks ended July 19, the largest four-week drop in data dating to 1982, according to the EIA, the Energy Department’s statistical unit. Inventories surged to 397.6 million on May 24, the most since 1931.