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WTI Oil Falls From One-Month High on U.S. Data; Brent Above $110

May 22 (Bloomberg) -- West Texas Intermediate crude dropped from a one-month high as more Americans than projected filed applications for unemployment benefits last week. Brent was above $110 a barrel.

Prices slid after the Labor Department reported jobless claims increased to 326,000 in the week ended May 17, more than the 310,000 median forecast by economists surveyed by Bloomberg. WTI advanced 1.7 percent yesterday on a government report that U.S. supplies tumbled as imports dropped. Brent touched an 11- month high on stronger Chinese manufacturing before retreating.

“The rally is looking a little overextended, and unless we continue to see good economic data, the market is going to meet greater and greater resistance,” Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said by phone. “Does the market have enough momentum to go up without another week of sizable drawdowns? I am not convinced.”

WTI for July delivery slid 17 cents to $103.90 a barrel at 12:41 p.m. on the New York Mercantile Exchange. Front-month futures climbed to $104.07 yesterday, a one-month high. Volume was 28 percent below the 100-day average for the time of day.

Brent for July settlement fell 12 cents to $110.43 a barrel on the London-based ICE Futures Europe exchange. It touched $111.04, the highest intraday price since March 4. The volume of all contracts traded was 17 percent above the 100-day average.

Brent was at a $6.53 premium to WTI. The spread closed at $6.48 yesterday, the narrowest in a month.

Jobless Claims

The jobless claims figure for a week earlier was revised up to 298,000 filings, the Labor Department said. The four-week moving average, a less volatile measure than the weekly figures, fell to 322,500 from 323,500.

“The U.S. number was bearish for WTI and that kind of tipped the balance,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “The Chinese data is overall bullish for Brent.”

U.S. crude stockpiles decreased 7.23 million barrels to 391.3 million in the week to May 16, the Energy Information Administration reported yesterday. Crude imports fell 658,000 barrels a day as U.S. output climbed to a 28-year high.

“A large part of yesterday’s inventory draw was due to the drop in imports,” McGillian said.

Brent climbed as much as 0.4 percent in intraday trading after a preliminary Chinese purchasing managers’ index from HSBC Holdings Plc and Markit Economics increased to 49.7 in May, the most in five months and exceeding the 48.3 median estimate of analysts surveyed by Bloomberg. The number remained below the expansion-contraction line of 50.

Chinese Manufacturing

“China’s manufacturing is now only barely contracting,” and today’s data are a welcome improvement, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, said by e-mail.

A similar figure from the National Bureau of Statistics and China Federation of Logistics and Purchasing will be published June 1. That gauge rose to 50.4 in April from 50.3 in March.

“The jobless claims are kind of offsetting the supportive China data,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago said by phone. “We’ve gone up a lot and the market is reluctant to move higher right now.”

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