BLBG: Crude Near Two-Week High as Stockpiles Seen Falling
West Texas Intermediate crude rose to near a two-week high on speculation that U.S. stockpiles shrank for the first time in a month, signaling increased demand in the world’s largest oil-consuming country.
Crude gained for a sixth time in seven days as inventories may have dropped 2.63 million barrels last week to the lowest level since May 31, according a Bloomberg survey before an Energy Information Administration report tomorrow. Brent’s premium over WTI narrowed to the lowest since January 2011.
“We are looking at a decline in inventories,” said Gordy Elliott, a risk-management specialist at Intl FC Stone LLC in St. Louis Park, Minnesota. “Brent is having more challenges to find a reason to rally. You’ll probably see WTI trading even at a premium to Brent.”
WTI for August delivery gained 61 cents, or 0.6 percent, to $98.70 a barrel at 9:28 a.m. on the New York Mercantile Exchange after reaching $98.92, the highest intraday level since June 19. The volume of all futures traded was 175 percent above the 100-day average.
Brent for August settlement rose 51 cents, or 0.5 percent, to $103.51 a barrel on the London-based ICE Futures Europe exchange. Volume was 2.3 percent below the 100-day average. The European benchmark grade’s premium to WTI narrowed to as little as $4.56 a barrel.
Crude Supply
U.S. crude stockpiles fell 0.7 percent to 391.5 million in the week ended June 28, the Bloomberg survey showed. Refineries probably increased operating rates to the highest level in more than 10 months as motor fuel production climbed before the U.S. Independence Day holiday on July 4, the survey showed.
Total petroleum consumption in the U.S., the world’s biggest oil consuming country, increased 3 percent in the week ended June 21 to 19 million barrels a day, the EIA, the Energy Department’s statistical arm, reported last week.
The U.S. accounted for 21 percent of global oil demand last year, according to the International Energy Agency’s monthly oil market report published on June 12.
Goldman Sachs Group Inc. has forecast since February 2012 that the Brent-WTI spread would shrink, even while the differential moved in the opposite direction. The bank reiterated in May this year that it would narrow to $5 in the third quarter as new pipeline capacity is added to move oil out of the storage hub at Cushing, Oklahoma. Cushing is the delivery point for WTI contracts traded in New York.
A supply hiccup at the U.K.’s biggest oil field, Buzzard, is now resolved, according to a person with knowledge of the matter who asked not to be identified because the information is confidential. Buzzard is the largest contributor to the Forties crude grade, which typically sets the price of the Dated Brent benchmark.
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
