West Texas Intermediate traded above $100 a barrel for an 11th day and narrowed its discount to Brent on speculation that supplies at Cushing, Oklahoma, fell.
WTI gained as much as 0.7 percent. Supplies at the delivery point for WTI futures probably decreased for a fourth time last week, to three analysts forecast, as the southern leg of TransCanada Corp.’s (TRP) Keystone XL pipeline moved oil to Texas. The WTI-Brent spread shrank to near $7 a barrel.
“Cushing is still playing a big role right now,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market’s trying to hold solidly above $100. That spread is basically tracking storage. It could narrow down to $5 again.”
WTI for April delivery gained 17 cents to $102.37 a barrel at 9:41 a.m. on the New York Mercantile Exchange. Prices are up 5 percent this month. The volume of all futures traded was 11 percent below the 100-day average.
Brent for April settlement increased 14 cents to $109.99 a barrel on the London-based ICE Futures Europe exchange. Volume was 12 percent below the 100-day average. The European benchmark was at a premium of $7.62 to WTI, compared with $7.65 on Feb. 21. It reached $7.05 earlier today.
Cushing stockpiles dropped 5.96 million barrels in the three weeks ended Feb. 14 to 35.9 million, the least since October, according to the Energy Information Administration. The EIA, the Energy Department’s statistical arm, is scheduled to release last week’s inventory data on Feb. 26.
Cushing Downtrend
“We expect this downtrend at Cushing to continue for at least a few more weeks, so any fundamental disappointment for WTI crude oil will mostly likely arrive from some other quarter,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York, in a note to clients.
Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC and Phil Flynn, senior market analyst at Price Futures Group in Chicago, also forecast a decrease. Finlon said supplies at the hub dropped 1.3 million barrels last week, while Flynn said the decline was 1 million.
The southern Keystone XL link began moving oil to the Texas Gulf Coast from Cushing last month. The line was initially flowing at 288,000 barrels a day and will ramp up over the course of the year toward its 700,000-barrel capacity, executives said in a Jan. 22 press conference at the company’s headquarters in Calgary.
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
