Crude Drops to Three-Week Low Ahead of Government Report

Posted by Charles Gunning

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West Texas Intermediate crude fell to the lowest level in almost four weeks before a government report that may show slowing U.S. economic growth.

Futures trimmed a monthly advance that would be the biggest since August. U.S. gross domestic product probably expanded at a 1 percent annualized rate in the second quarter, compared with 1.8 percent in the previous three months, according to a Bloomberg survey before data are released tomorrow. Confidence among U.S. consumers declined more than forecast in July. WTI’s discount to Brent widened to a three-week high.

Crude also slid as the dollar strengthened against its rivals, reducing oil’s investment appeal. The Bloomberg U.S. Dollar Index, which measures the greenback against 10 leading currencies, gained as much as 0.4 percent.

Implied volatility for at-the-money WTI options expiring in September was 22.3 percent, compared with 21.2 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 493,593 contracts as of 2:40 p.m. It totaled 428,816 contracts yesterday, 35 percent below the three-month average. Open interest was 1.84 million contracts.

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