.West Texas Intermediate crude fell for a third day amid speculation that the Federal Reserve will reduce stimulus and after Bank of America’s Francisco Blanch said it will be difficult for WTI to rally much more.
Prices slid as much as 1.5 percent as investors awaited remarks by Fed Bank of Chicago President Charles Evans for indications of the central bank’s policy. Dallas Fed President Richard Fisher said yesterday the bank is closer to slowing $85 billion in monthly bond buying. WTI could drop $8 to $10, Blanch, head of commodities research at Bank of America in New York, said in a Bloomberg Radio interview with Tom Keene and Michael McKee.
“People have been concerned about the Fed reducing its stimulus and we seem to be closer to the point where it actually happens,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It could be that people are seeing Blanch’s comments as a tipping point. This is now the time to take some profit.”
WTI for September delivery decreased $1.12, or 1.1 percent, to $105.44 a barrel at 12:21 p.m. on the New York Mercantile Exchange. Earlier, it gained as much as 0.7 percent. The volume of all futures traded was 9.3 percent below the 100-day average.
I think the days of the big spread between WTI and Brent are over. With railcar takeaway capacity from the Bakken increasing, the availability of WTI on both coasts and the Gulf is a price -changer. Also, with Mexico now revising their constitution to let American big oil in the door, this could drive or at least keep WTI where its at. I know when the driving season is over, WTI is supposed to drop, right? But we're in a new time now. America is on its way to being the No. 1 oil producer in the world. I hope that bids well for CVI and other refiners.