(Bloomberg) — Oil fell after Norway ended a strike that threatened to halt output by western Europe’s largest crude exporter and as China reduced purchases of the raw material.
Futures dropped as much as 1.6 percent in New York after Norway’s government ordered compulsory arbitration in the dispute, preventing a platform workers’ lockout scheduled to start at midnight yesterday. China’s net crude imports fell to the lowest level this year, according to customs data today.
“The strike is obviously putting downward pressure on prices,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “This is one more supply concern that we can put to the side.”
Crude oil for August delivery declined 61 cents, or 0.7 percent, to $85.38 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices have decreased 14 percent this year.
Brent oil for August settlement fell $1.15, or 1.2 percent, to $99.17 a barrel on the London-based ICE Futures Europe exchange. Brent’s premium to West Texas Intermediate crude, the grade traded in New York, was at $13.79 a barrel, down from $14.33 yesterday.
Norway announced the arbitration in a statement published on the Oslo-based Labor Ministry’s website today. The strike, which started June 24, disrupted about 15 percent of the nation’s oil output, the Oil Industry Association said June 27. The nation pumps about 1.8 percent of global consumption, data from the Norwegian Petroleum Directorate show.
Statoil ASA, Norway’s largest energy company, said it will resume full production within a week.
China’s General Administration of Customs said the nation’s net crude imports fell to 5.28 million barrels a day in June. That’s the least since purchases of 5.1 million barrels in December and compares with a record 5.98 million in May, according to data compiled by Bloomberg. China is the world’s second-biggest oil-consuming country after the U.S.
The customs bureau also reported that China’s total imports of goods increased 6.3 percent in June from a year earlier, below the 11 percent median estimate in a Bloomberg News survey. Export growth was 11.3 percent, down from 15.3 percent in May.
“The news from China is both good and bad,” Flynn said. “The weak import data may increase the likelihood of increased stimulus, which would boost demand.”
Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.66 a barrel today, according to data compiled by Bloomberg. Futures yesterday rebounded after trading near that indicator. Buy orders tend to be clustered close to chart-support levels.
Money managers increased bullish U.S. oil wagers in the seven days ended July 3, according to the Commodity Futures Trading Commission’s Commitments of Traders report yesterday. Net-long positions advanced by 10,994, or 8.9 percent, to 135,011 futures and options combined.
U.S. oil supplies probably declined for a third week as refineries processed more crude to meet peak summer demand and as imports declined, a Bloomberg News survey shows. Stockpiles fell 1.38 million barrels in the seven days ended July 6, according to the median of eight analyst estimates before an Energy Department report tomorrow.