Crude fell for the sixth time in seven days as the economy of Japan slowed in the second quarter and the dollar showed signs of strengthening. Prices fell as much as 0.8 percent as Japans GDP rose an annualized 2.6 percent, down from 3.8 percent the prior quarter, the Cabinet Office said. The dollar gained versus the majority of its 10 most-traded peers, reducing crude’s investment appeal. Bijan Namdar Zanganeh pledged to raise Iran’s output if he becomes the country’s oil minister.
We had weak GDP data out of Japan, the strong dollar is probably where some of the pressure is coming from. We are back to the trading band between $103 and $108.
Brent for September settlement dropped 49 cents, or 0.5 percent, to $107.73 a barrel on the London-based ICE Futures Europe exchange. Volume was 11 percent below the 100-day average.
Second-quarter growth in Japan, the third-largest oil-consuming country, was slower than the 3.6 percent gain predicted by 32 economists in a WorldWatch survey. Consumer spending, which accounts for about 60 percent of the economy, contributed 1.9 percentage points to the annualized real growth rate. The U.S. and China are the top two oil users.
Japan is clearly the headline, that is having a effect of a damp on crude.
In the US the central bank will begin curbing the $85 billion a month bond purchases in September.
Zanganeh, a former Iranian oil minister nominated by President Hassan Rohani to take the post, said his “first action will be to bring the country’s oil production capacity back to 2005” levels, according to Shana, the oil ministry’s news website.
Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabis has slipped to sixth place, producing 2.56 million barrels a day in July.
Iranian President Hassan Rohani “is going to ease tension rather than raise it,” Iraq’s North Oil Co. increased pumping through a pipeline to Ceyhan, Turkey, to as much as 425,000 barrels a day to make up for interruptions, the company said Aug. 9. Supply averaged 300,000 to 325,000 in recent weeks.