West Texas Intermediate crude rose from the highest level in 15 months after U.S. stockpiles fell for a second week. Brent’s premium to WTI shrank to the narrowest since November 2010. Futures climbed as much as 0.9 percent after gaining 2.9 percent yesterday, the most in two months. Crude inventories dropped by 9.87 million barrels last week, according to Energy Information Administration data yesterday. That’s more than three times a median decline of 3.2 million forecast in a Bloomberg News survey. Egypt ordered the arrest of the Muslim Brotherhood leader, escalating a confrontation between Islamists and an army-backed interim administration. “Demand for oil is clearly on the rise, particularly as the U.S. economy recovers,� said Michael McCarthy, a chief market strategist at CMC Markets in Sydney who predicts investors may sell West Texas contracts at about $108 a barrel. “Tensions in the Middle East are always a potential driver of higher prices, but the narrowing of the gap between Brent and WTI suggests that it’s actually the demand side of the equation driving things.� WTI for August delivery increased as much as 93 cents to $107.45 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.05 at 3:43 p.m. Singapore time. The volume of all futures traded was more than double the 100-day average. The contract advanced $2.99 to $106.52 yesterday, the highest close since March 27, 2012. Brent Premium Brent for August settlement rose as much as 42 cents, or 0.4 percent, to $108.93 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $1.83 to WTI. The spread was $1.99 yesterday, the narrowest based on closing prices since Nov. 30, 2010. WTI’s discount to North Sea Brent has shrunk from as much as $23.18 a barrel on Feb. 8 as the U.S. reduced distribution bottlenecks that had boosted inventories. Crude stockpiles at Cushing, Oklahoma, the delivery point for New York futures and the nation’s largest oil-storage hub, fell 2.7 million barrels in the week ended July 5, according to the EIA, the Energy Department’s statistical arm. That’s the biggest drop since September 2009. Total U.S. crude inventories declined to 373.9 million barrels, the lowest level since February, the data showed. Supplies decreased 10.3 million barrels in the prior seven days, the most this year. Gasoline Supplies U.S. gasoline stockpiles fell by 2.6 million barrels last week, said the EIA. They were projected to increase by 1 million, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, rose by 3 million, compared with a forecast gain of 1 million in the survey. Refineries operated at 92.4 percent of capacity, up 0.2 percentage point from the prior week and the highest rate since August, the EIA data shows. U.S. motor-fuel demand typically rises from the last weekend in May to the Labor Day weekend in early September, the nation’s peak vacation season. Nigeria is “quite comfortable� with current WTI and Brent prices, which may be stable for at least the next 12 months, Petroleum Minister Diezani Alison-Madueke said in an interview in Beijing today. Nigeria is the largest African producer in the Organization of Petroleum Exporting Countries. 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. Egyptian prosecutors sought Mohammed Badie, the general guide of the Muslim Brotherhood, and nine other Islamists on grounds they incited deadly clashes after the ouster of Mohamed Mursi as president. Hamza Zawba, a spokesman for the Brotherhood’s political arm, repeated its position that it won’t engage in talks until Mursi is reinstated. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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