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West TX Oil Drops Sharply below $94 as September Contract Nears Expiration

West Texas Intermediate oil tumbled to a seven-month low as investors sold September crude before expiration and purchased cheaper contracts for future delivery. Brent traded near the lowest level in almost 14 months.

September crude dropped 2 percent today while October decreased 1 percent. The front month’s premium over the next month narrowed from the widest since 2008. September WTI futures expire tomorrow. Brent plunged yesterday as Kurdish and Iraqi forces regained control of Iraq’s largest dam, stalling an advance by Islamic State militants.

“Nobody’s interested in taking crude for September delivery,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “If you don’t need the physical barrels, you are going to sell. The spread has been all over the place the last few days as expiration approaches.”

Bloomberg [1]

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