WTI Crude Set for Biggest Loss in a Week With Brent

West Texas Intermediate crude headed for its biggest loss in a week as U.S. economic data bolstered the outlook for higher interest rates. Brent declined in London amid concern Chinese demand is slowing.

Futures dropped as much as 0.9 percent in New York and 0.8 percent in London. Both grades were heading for their biggest quarterly loss in more than two years. The dollar traded near its highest closing level against the euro in more than two years, curbing the appeal of commodities, amid speculation the Federal Reserve will increase interest rates. Gauges of Chinese manufacturing are due tomorrow and on Oct. 1, and U.S. payrolls data will be released on Oct. 3.

“It will be a very heavy week in macro data,” Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland. “China is not a strong story. For financial investors, the Fed moving out of quantitative easing does not call for investment in commodities,” he said by e-mail.

WTI for November delivery slid as much as 80 cents to $92.74 a barrel in electronic trading on theNew York Mercantile Exchange and was at $93.22 at 12:59 p.m. London time. The contract climbed $1.01 to $93.54 on Sept. 26, the highest close since Sept. 17. The volume of all futures traded was about 15 percent below the 100-day average for the time of day. Prices have lost 12 percent in the past three months, the biggest quarterly drop since June 2012.

Brent for November settlement decreased as much as 73 cents to $96.27 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $3.52 to WTI on ICE, near the narrowest in more than a year. Brent has lost 14 percent this quarter.

U.S. Economy

The U.S. dollar was at $1.2706 per euro, near the Sept. 26 closing price of $1.2684 that was the lowest since Sept. 6, 2012. Gross domestic product advanced at a revised 4.6 percent annualized rate in the second quarter, up from a previous estimate of 4.2 percent, the Commerce Department reported on Sept. 26. The U.S. payrolls report on Oct. 3 will probably show companies added 215,000 workers in September, up from 140,000 in August, according to a Bloomberg survey.

“The dollar making some additional gains, oversupplied oil markets,” are the reasons behind oil’s slide today, Ole Sloth Hansen, an analyst at Saxo Bank A/S in Oslo, said by e-mail. “Only a dollar sell-off or correction stands in the way of a test of $95 on Brent.”

China Data

In China, the official Purchasing Managers Index on Oct. 1 is estimated to show a slowdown to 51, compared with 51.1 previously, according to a Bloomberg survey, as a downturn in the real estate sector damps domestic demand.

Aircraft from the U.S., Saudi Arabia and the United Arab Emirates attacked four modular refineries in Syria controlled by Islamic State over the weekend, U.S. Central Command said in an e-mailed statement yesterday. A command post north of Raqqah in Syria was attacked, while a safe house and checkpoints were destroyed in Iraq.

The U.S.-led campaign in Syria follows bombings in Iraq against Islamic State that started last month. The fighting has largely spared the south of Iraq, home to three quarters of oil output from the second-biggest producer in the Organization of Petroleum Exporting Countries.

Hedge-fund managers and other large speculators reduced net-long positions on WTI by 4.8 percent to 193,965 contracts in the week ended Sept. 23, according to data from the U.S. Commodity Futures Trading Commission. Bullish bets on Brent crude were cut by the most in a month, according to ICE data. Long positions outnumbered bets that prices would fall by 43,559 lots for the same week, the lowest since June 2012, the data show.

WTI’s decline represents “a good time to make long positions again” as the U.S. economy shows signs of recovery, said Ken Hasegawa, an energy trading manager at Newedge in Tokyo, said by phone.

WTI has technical resistance along its 30-day middle Bollinger Band, data compiled by Bloomberg show. Futures have halted intraday gains since mid-September near this indicator, at about $93.60 a barrel today. Sell orders tend to be clustered around chart-resistance levels.