BLBG:WTI Advances to 14-Month High as U.S. Crude Inventories Plunge
West Texas Intermediate jumped to its highest level in 14 months on speculation that shrinking U.S. crude stockpiles indicate increased demand in the world’s biggest oil consumer.
Futures climbed as much as 1.3 percent in New York to the strongest level since May 3, 2012. Crude inventories fell by 9 million barrels last week, said a person with knowledge of data from the industry-funded American Petroleum Institute. A government report today may show that supplies dropped by 3.2 million barrels, according to a Bloomberg News survey. U.S. refiners typically boost output to meet peak motor-fuel consumption during the U.S. summer driving season.
“That was the second straight week of huge draws in U.S. crude inventories,” said Amrita Sen, an analyst at Energy Aspects in London. “Continued large inventory draws in the U.S. are fueling further optimism about the U.S. economy, and reflect that production there is starting to flat-line.”
WTI for August delivery rose as much as $1.34 to $104.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.84 at 11:07 a.m. London time. The volume of all futures traded was 68 higher than the 100-day average.
Brent for August settlement gained as much as 66 cents, or 0.6 percent, to $108.47 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $3.41 a barrel to WTI contracts. Earlier the difference shrank to $3.07, the smallest intraday gap since Dec. 31, 2012.
Technical Breach
WTI is extending its rally after breaching a technical resistance level on the weekly chart, according to data compiled by Bloomberg. Futures settled above $103.39 a barrel, the 61.8 percent Fibonacci retracement of the decline to $32.40 in December 2008 from an intraday record high of $147.27 in July that year. Investors typically buy contracts when prices exceed technical resistance.
U.S. gasoline stockpiles shrank by 3.5 million barrels in the week ended July 5, the API said yesterday, according to the person who asked not to be identified because the report wasn’t publicly distributed. Supplies are forecast to rise by 1 million barrels, according to the median estimate of 11 analysts surveyed by Bloomberg before data from the EIA, the Energy Department’s statistical arm.
Summer Driving
“If people are confident about hitting the road and spending money, then they are confident about the economy,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “This time of the year, you have to expect” a decrease in stockpiles, he said.
Distillate inventories, including heating oil and diesel, increased by 2.8 million barrels, according to the API, which has started releasing statistics on a subscription basis. A gain of 1 million barrels is projected in the survey.
U.S. refineries probably boosted processing by 0.2 percentage point to 92.4 percent of capacity last week, according to the Bloomberg survey. That would be the highest operating rate since August. Motor-fuel demand typically rises from the last weekend in May to the Labor Day weekend in early September, the peak vacation season in the U.S.
The API in Washington collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.
WTI surged above $100 a barrel last week 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.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
