West Texas Intermediate crude fell for a second day, extending the first weekly drop in more than a month. WTI’s discount to London -traded Brent futures widened for a fourth day.

Futures slid as much as 0.6 percent after losing 3.1 percent last week. Saudi Arabia signaled it won’t increase production capacity as planned because demand is waning. Egypt ’s interior minister said security forces are determined to stabilize the country after dozens of people died in weekend clashes. The U.S. Federal Open Market Committee meets tomorrow, while manufacturing data from China is due on July 1.

“It’s a significant week data-wise for the market ,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who predicts investors may buy WTI contracts at about $103 a barrel. “The fact that the situation in Egypt is back in the news will probably influence the risk perceptions of some traders.”

WTI for September delivery declined as much as 60 cents to $104.10 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.18 at 3:20 p.m. Singapore time. The volume of all futures traded was 56 percent higher than the 100-day average. The contract decreased 79 cents to $104.70 on July 26, the lowest close since July 9.

Brent for September settlement fell as much as 27 cents, or 0.3 percent, to $106.90 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $2.83 to WTI, up from $2.47 on July 26.

Egypt Unrest

WTI surged above $100 a barrel on July 3 for the first time since September as Egypt’s political upheaval heightened concern that unrest in the most populous Arab country will spread and disrupt Middle East oil supplies.

Interior Minister Mohamed Ibrahim’s comments signaled impatience with Islamists who want former president Mohamed Mursi reinstated. At least 72 people were killed near a protest in Cairo, the highest death toll in a single incident since the military deposed Mursi. Eight others died in Alexandria, the Health Ministry said.

The Middle East accounted for 35 percent of global oil production in the first quarter of this year, according to the International Energy Agency .

Saudi Prince Alwaleed bin Talal told Oil Minister Ali Al-Naimi in an open letter that the kingdom won’t be able to boost its output capacity to 15 million barrels a day as planned and that rising U.S. production from shale formations may reduce American demand for crude imports.

Saudi Supply

The prince published the letter yesterday on Twitter, saying there’s a “clear and increasing decline” in demand for crude from members of the Organization of Petroleum Exporting Countries, particularly Saudi Arabia. The kingdom is now pumping below capacity as consumers cut imports, Alwaleed said.

Al-Naimi said on May 31 he wasn’t concerned that rising U.S. shale supply will reduce demand for imports. U.S. oil production climbed to 7.56 million barrels a day in the week ended July 19, the most since December 1990, according to the Energy Information Administration.

Hedge funds raised bullish bets on WTI to a record as U.S. crude stockpiles fell the most in at least three decades. Money managers boosted net-long positions, or wagers that prices will increase, by 9.8 percent to 334,094 futures and options combined in the seven days to July 23, according to the Commodity Futures Trading Commission’s weekly report on July 26. That’s the highest level in data going back to 2006.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net ; Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net