BLBG:WTI Oil Trades Near Highest in 16 Months as Brent Spread Narrows
West Texas Intermediate crude traded near the highest price in 16 months and was poised for a fourth weekly gain on signs the U.S. economic recovery may be sustainable. WTI’s discount to Brent shrank to the narrowest since October 2010.
Futures were little changed in New York after rising 1.5 percent yesterday, the most in more than a week. The number of Americans who filed for jobless benefits dropped to the fewest since early May, the Labor Department said. WTI settled at 89 cents a barrel below Brent, from a discount of as much as $23.44 in February, indicating oil demand is stronger in the U.S. than in Europe and Asia.
“The WTI-Brent spread may hit parity next week as a lot of people are betting on it now,” Ken Hasegawa, an energy-trading manager at Newedge Group in Tokyo, said by phone. “The U.S. economy is doing much better than Europe and Asia, including China. Fundamentally WTI will be supported.”
WTI for August delivery was at $107.93 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 2:55 p.m. Singapore time. The volume of all futures traded was 29 percent below the 100-day average. Prices climbed $1.56 a barrel to $108.04 yesterday, the highest since March 19, 2012. Futures have advanced 1.9 percent this week. The more actively traded September contract slid 15 cents to $107.66.
Brent for September settlement on the ICE Futures Europe Exchange was down 1 cent at $108.69 a barrel. The European grade was at a premium of $1.03 to WTI for the same month.
Cushing Stockpiles
WTI, the bellwether U.S. crude, had typically been the more expensive grade until mid-2010. The convergence between Brent, a pricing benchmark for more than half the world’s oil, and WTI shows how improved pipeline networks and the use of rail links have helped to unlock a supply glut at Cushing, Oklahoma, the biggest oil-storage hub.
Stockpiles at Cushing fell 3.57 million barrels in the two weeks ended July 12 to 46.1 million, the lowest level since Nov. 30, the Energy Information Administration reported on July 17. Total crude inventories declined by 16.8 million over the same period to 367 million.
The number of workers who filed applications for unemployment insurance payments slid by 24,000 to 334,000 in the week to July 13, the Labor Department data showed. Economists surveyed by Bloomberg forecast a median 345,000.
The U.S. is the largest oil consumer and accounted for about 21 percent of global demand last year, according to BP Plc’s Statistical Review of World Energy. China, the second-biggest, used 11 percent.
Gasoline Prices
Gasoline futures rose as refiners in California shut plants for unplanned work. The contract for August delivery climbed as much as 5.34 cents, or 1.7 percent, to $3.1632 a gallon in electronic trading in New York.
Tesoro Corp. is performing unscheduled maintenance at its Golden Eagle refinery after a line leak, according to Tina Barbee, a San Antonio-based spokeswoman. Royal Dutch Shell Plc said operations at its Martinez plant have been “returned to normal” after a unit was shut on July 14.
WTI may drop next week on signs that this month’s rally of 12 percent has been excessive, a Bloomberg News survey showed. Nineteen of 33 analysts and traders, or 58 percent, forecast futures will decline through July 26. Seven respondents, or 21 percent, predicted a gain, while another seven projected no change. Last week, half of those surveyed estimated an increase.
To contact the reporter on this story: Winnie Zhu in Singapore at wzhu4@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
