By MOMING ZHOU
West Texas Intermediate crude fell to a four-month low amid
global declines in stocks and commodities and after CVR Refining
LP said a Kansas refinery
will be shut longer than
expected, reducing oil demand.
The seventh decline in eight days capped a monthly loss of
6.8%, the biggest in two years. CVRs plant in
Coffeyville may be shut for four weeks after a July 29 fire,
CEO Jack Lipinski said on July 31 an earnings call. The plant
uses crude from Cushing, Oklahoma, the delivery point for WTI
futures. The Bloomberg Commodity Index slid to a five-month
low and the Standard & Poors 500 Index headed for
the first monthly drop since January.
Coffeyville is bringing the market down, said
Phil Flynn, senior market analyst at the Price Futures Group
in Chicago. You are going to be using less crude from
Cushing. There is also broad concern about global stock
WTI for September delivery decreased $2.10, or 2.1%, to
$98.17/bbl on the New York Mercantile Exchange, the lowest
settlement since March 17. The volume of all futures traded
was about 35% above the 100-day average. Prices were down
6.8% in July, the most since May 2012. The premium of
September contracts over October slumped to 85 cents from
$1.23 on July 30.
Brent for September settlement slipped 49 cents, or 0.5%, to
$106.02/bbl on the London-based ICE Futures Europe
exchange. Volume was 13%
above the 100-day average. The Europe
an benchmark crude was at a
premium of $7.85 to WTI on ICE, the biggest since June 24.
The fire at the 115,000 bpd Coffeyville refinery
damaged fiber optics in
the control system, forcing valve closings on units and
preventing crews from operating equipment, according to a
person familiar with operations.
CVR, which owns 1 million bbl of storage at Cushing and
leases 3 million bbl of tanks, says Cushing supplies go to
Coffeyville and the Wynnewood refinery
Inventories at Cushing started declining in January after the
southern leg of TransCanada Corp.s Keystone XL pipeline
began moving oil from the hub to Gulf refineries. Supplies
dropped to 17.9 million bbl in the week ended July 25, the
lowest level since 2008, according to the Energy Information
Coffeyville is connected directly to Cushing, and
thats why its a big deal, said Carl Larry,
president of Oil Outlooks & Opinions LLC in Houston.
We are probably going to see a build at Cushing.
WTI also slipped with other commodities and equities as
Argentina missed a payment on $13 billion of its debt. The
Bloomberg Commodity Index of 22 raw materials fell to 127.88,
the lowest level since February. The S&P 500 declined as
much as 2% on July 31, down 1.4% for the month.
Argentina missed a deadline on July 30 to pay $539 million in
interest after two days of negotiations in New York failed to
produce a settlement with Elliott Management Corp. and other
hedge funds that won a court order for full repayment on the
securities they own. The ruling prevents Argentina from
servicing its debt until the holdouts settle or are paid the
$1.5 billion judgment.
We have the Argentina debt crisis and we have
Coffeyville, Larry said. Everything is piling