West Texas Intermediate oil fell for a second day on signs of economic slowdown in the U.S. and China and after an industry group said U.S. stockpiles climbed for the first time in three weeks.
Futures dropped as much as 3 percent as ADP Research Institute said U.S. companies added fewer workers than forecast in April and China’s manufacturing expanded at a weaker pace in April. Crude inventories rose by 5.18 million barrels last week, the American Petroleum Institute said. The Energy Information Administration may report a gain of 1.1 million barrels, according to a Bloomberg News survey of analysts.
“The ADP number is quite disappointing and the Chinese manufacturing report is really weighing on this market,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The API reported a quite big build. It’s pulling the market down.”
WTI for June delivery retreated $2.60, or 2.8 percent, to $90.86 a barrel at 9:20 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 32 percent above the 100-day average for the time of day. Prices were down 3.9 percent last month.
Brent for June settlement slid $2.47, or 2.4 percent, to $99.90 a barrel on the London-based ICE Futures Europe exchange. Volume was 16 percent above the 100-day average. Brent’s premium to WTI decreased to as small as $8.39, the narrowest since January 2012.
U.S. companies added 119,000 jobs last month, the smallest since September, figures from the Roseland, New Jersey-based ADP showed today. The median forecast of economists surveyed by Bloomberg projected a 150,000 advance. The April number followed a revised 131,000 gain in March that was smaller than initially estimated.
China’s Purchasing Managers’ Index was at 50.6, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. That compared with the 50.7 median forecast of analysts in a Bloomberg News survey and a March reading of 50.9.
The U.S. and China are the world’s two biggest oil consuming countries, together using 32 percent of global oil in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. consumed 21 percent.
U.S. crude inventories climbed 1.4 percent to 388.4 million barrels in the week ended April 26, the API said. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical unit, for its weekly survey.
Daily output by the Organization of Petroleum Exporting Countries increased in April by 194,000 barrels a day to 30.9 million barrels, a separate Bloomberg survey indicated. Saudi Arabia, the group’s biggest producer, increased daily output by 80,000 barrels to 9.18 million.
“With inventories at the levels they are at, it is a question of how much demand there is, and there is growing evidence of a slowdown in economic activity with even China weaker than expected,” said Michael Hewson, a market analyst at CMC Markets Plc in London. “The direction of travel on oil is down and I see no reason to change that view unless OPEC cuts production.”
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