Oil Near One-Week High; API Reports First Inventory Drop

West Texas Intermediate traded near the highest level in more than a week. U.S. crude stockpiles declined for the first time this year, according to the American Petroleum Institute.

Futures advanced as much as 0.5 percent in New York, extending yesterday’s 0.5 percent gain. Crude inventories fell 2.3 million barrels last week, the first drop in six weeks, data from the industry-funded API showed. An Energy Department report today may show supplies rose, according to a Bloomberg News survey. The International Energy Agency trimmed forecasts for global oil demand because of constrained economic expansion.

“Declining inventory levels in the U.S.” are supporting prices, said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “If the U.S. Energy Department reports a similar fall in stocks, oil prices are likely to climb further.”

Crude for March delivery was at $97.78 a barrel in electronic trading on the New York Mercantile Exchange, up 27 cents, at 1:27 p.m. London time. The contract rose as much as 46 cents to $97.97, the highest intraday level since Feb 1. The volume of all contracts traded was 22 percent above the 100-day average.

Brent for March settlement on the London-based ICE Futures Europe exchange, which expires today, was up 5 cents at $118.71 a barrel. The more actively traded April contract was 15 cents higher at $117.90. The European benchmark grade was at a premium of $20.92 to WTI, compared with $21.15 yesterday. The spread was $23.18 on Feb. 8, the widest since Nov. 26.

OPEC Output

The IEA reduced its 2013 world demand estimate by 90,000 barrels a day following a weaker growth outlook from the International Monetary Fund. Global oil use will increase by 840,000 barrels a day in 2013, or 0.9 percent, to 90.7 million a day. Production among OPEC nations fell to its lowest level in a year, limiting relief for prices from an increase in spare production capacity, the IEA said today in its monthly oil market report.

WTI will average $92.81 a barrel this year, up 3.7 percent from a January projection of $89.54, the Energy Department said yesterday in its monthly Short-Term Energy Outlook.

Oil in New York may rise to $100 a barrel as demand along the two-year moving average propels futures above technical support, according to Barclays Plc. Buyers have emerged near the $95 level, signaling that the market may test a range of $98.25 to $98.35, the bank said in an e-mailed report.

Oil Inventories

U.S. crude stockpiles dropped to 369.5 million barrels last week, the API data show. Supplies are forecast to increase 2.2 million barrels to 373.9 million, according to the median estimate of 10 analysts surveyed by Bloomberg.

Gasoline inventories fell 810,000 barrels, according to the API. This compares with a projected 500,000 barrel gain in the survey. Heating oil, diesel and other distillate fuels slid 1.1 million barrels, compared with an estimated 1.75 million-barrel decline in the survey.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Record fuel exports are straining the capacity of ports along the Gulf of Mexico, causing congestion at terminals, deepening a glut of gasoline and pushing prices lower.

Distillates leaving the U.S. in the week ended Feb. 1, mostly from the Gulf Coast, climbed 8.7 percent from a year earlier, government data show. Gasoline in the region sank to a record low versus futures in December, and the discount yesterday was more than four times wider than the 10-year average, according to data compiled by Bloomberg.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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