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WTI Crude Falls to Three-Week Low on China Exports; Brent Slips

March 10 (Bloomberg) -- West Texas Intermediate crude fell to a three-week low and Brent decreased after Chinese exports unexpectedly sank, bolstering concern that economic growth in the world’s second-biggest oil consuming nation will slow.

Futures fell 1.4 percent in New York. China’s overseas shipments declined by 18.1 percent in February from a year earlier, the biggest drop since August 2009, customs data showed March 8. That compared with a median estimate for a 7.5 percent gain in a Bloomberg survey of economists. A government report will probably show U.S. crude supplies rose an eighth week, according to analysts surveyed by Bloomberg.

“The Chinese export numbers are a flashing light,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “It raises concerns about the economy and commodity demand going forward.”

WTI for April delivery declined $1.46 to settle at $101.12 a barrel on the New York Mercantile Exchange, the lowest level since Feb. 14. Prices were stable last week, snapping a seven- week advance. The volume of all futures traded was 2.9 percent higher than the 100-day average at 3:47 p.m. New York time.

Brent for April settlement fell 92 cents, or 0.8 percent, to end the session at $108.08 a barrel on the London-based ICE Futures Europe exchange. Futures volume was 4.9 percent below the 100-day average. The European benchmark grade closed at a $6.96 premium to WTI, up from $6.42 on March 7.

Chinese Growth

The decline in China’s exports was the largest since the global financial crisis five years ago, dealing a blow to confidence after Communist Party leaders meeting in Beijing last week set a 7.5 percent economic growth target for this year.

The nation imported 23.05 million metric tons of crude in February, down 18 percent from a record in January, data from the Beijing-based Customs General Administration show.

China will account for about 11 percent of global oil demand in 2014, compared with 21 percent for the U.S., according to forecasts from the International Energy Agency in Paris.

“Today’s stats have undermined the prices of commodities dependent on Chinese demand,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London. “Still, the statistics that come from emerging markets tend to be a bit bumpy, with quite big swings, and the picture is still for higher growth than in mature economies.”

The Standard & Poor’s GSCI Index, a gauge of 24 commodities, decreased as much as 1.1 percent. U.S. stocks fell, with the S&P 500 Index down as much as 0.6 percent.

U.S. Stockpiles

An Energy Information Administration report on March 12 will probably show U.S. crude supplies increased by 1.85 million barrels last week, according to the median of eight responses in a Bloomberg survey. Supplies have expanded the past seven weeks to 363.8 million, the highest level in two months.

“It will be hard to keep this thing above $100, given the way things are lining up,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion.

Russian troops detained Ukrainian border guards in Crimea as the region prepares for a March 16 referendum on joining Russia. Russian President Vladimir Putin is wresting control of Crimea, home to his country’s Black Sea Fleet, from Ukraine following last month’s ouster of Moscow-backed leader Viktor Yanukovych.

WTI climbed to a five-month high on March 3 amid concern that escalating tension between Ukraine and Russia, the world’s biggest energy exporter, would disrupt shipments. The crisis is the worst between Russia and the West since the Cold War, with the European Union and the U.S. imposing sanctions.

Crimean Situation

“The world’s beginning to realize that Putin isn’t leaving the Crimea and we are all going to just have to live with it,” O’Grady said. “If there’s not going to be a war that disrupts supplies to Europe, there’s no reason for prices to keep rising. Attention is moving to the very weak Chinese exports numbers and the seasonal demand picture.”

Crude oil demand peaks in the Northern Hemisphere’s winter, when refineries boost output of heating fuels.

Brent fell less than WTI as Libyan officials vowed to stop a tanker from leaving a rebel-held port. Officials said they would keep the ship from departing as the central government struggled to reassert control over the country’s main revenue source. The vessel arrived in Es Sider, the nation’s largest export terminal, after Libyan armed forces refused orders to fire on the ship, Prime Minister Ali Zaidan said on March 8.

Libyan Output

Libya, a member of the Organization of Petroleum Exporting Countries, pumped 275,000 barrels of oil yesterday, said Mohamed Elharari, a spokesman for state-run National Oil Corp. in Tripoli. The country, which holds Africa’s largest oil reserves, produced about 1.6 million barrels a day before the rebellion that ended Muammar al-Qaddafi’s four-decade rule in 2011.

Investors added a net $2.57 million March 7 to U.S.-listed exchange-traded funds that invest in energy, equivalent to 0.07 percent of total assets, data compiled by Bloomberg show. They added $36.8 million to the United States Oil Fund, the biggest oil ETF.

Implied volatility for at-the-money WTI options expiring in May was 18.8 percent, up from 18.5 percent March 7, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 469,864 contracts at 3:48 p.m. It totaled 525,729 contracts March 7, 4.9 percent above the three-month average. Open interest was 1.7 million contracts.

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