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WTI Crude Climbs to One-Week High After U.S. Supply Drop

West Texas Intermediate crude advanced to the highest in more than a week amid speculation that the European Central Bank will cut its key interest rate to a record low next week.

Futures increased as much as 0.9 percent in New York to the highest intraday price since April 15. Banks including UBS AG and Royal Bank of Scotland Group Plc (RBS) expect a rate reduction for May. U.S. crude stockpiles fell 845,000 barrels last week, the American Petroleum Institute said yesterday. Analysts in a Bloomberg survey before the API report had forecast government data today to show supplies climbed 2 million barrels to the most in 22 years, according to a Bloomberg News survey.

“Markets seem to think an ECB rate cut will solve Europe’s problems,” Michael Hewson, an analyst at CMC Markets Plc in London, said by e-mail. “Expectations of lower inventories could also be underpinning prices.”

WTI for June delivery rose as much as 78 cents to $89.96 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.53 at 1:05 p.m. London time. The volume of all futures traded was 22 percent below the 100-day average. The contract slid 1 cent to $89.18 yesterday. Prices are down 2.5 percent this year.

Brent for June settlement gained as much as 91 cents, or 0.9 percent, to $101.22 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $11.32 to WTI compared with $11.13 yesterday.

Cushing Inventories

U.S. gasoline stockpiles decreased 2.7 million barrels last week to 219.9 million, the lowest level this year, the report from the industry-funded API showed. Distillate inventories, including heating oil and diesel, gained by 666,000 barrels. Crude supplies at Cushing, Oklahoma, the delivery point for Nymex futures, increased by 38,000 barrels to 51.1 million, the highest level since Feb. 1.

Oil prices are rising because everything is up,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by phone today. “External factors will rule the day until the U.S. inventory report, which could cause some volatility.”

The Energy Information Administration report today may show gasoline stockpiles declined 600,000 barrels while distillates rose by 500,000 barrels last week, according to the median estimate of 11 analysts in the Bloomberg 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 EIA, the Energy Department’s statistical arm, for its weekly survey.

UBS now sees the ECB cutting its key rate to 0.5 percent from 0.75 percent next month. Rabobank International and ABN Amro Bank NV also see a reduction in May, as does RBS.

OPEC Exit

Iraq may exit the Organization of Petroleum Exporting Countries if the group won’t let the nation’s output rise, State Minister Ali al-Dabbagh said in Abu Dhabi yesterday.

OPEC must make room for 5 million barrels a day of Iraqi oil exports in the future, al-Dabbagh said at the Middle East Petroleum and Gas Conference, without giving a time frame. The country is the second-biggest producer in the group, pumping 3.2 million barrels a day in March, according to a Bloomberg survey of producers and analysts. OPEC is scheduled to meet May 31 in Vienna to discuss its collective output ceiling of 30 million barrels a day.

“We want to stay in OPEC, but if OPEC is not helping us then we are looking at our interests,” al-Dabbagh said.

Goldman Sachs Group Inc. cut its three-month outlook for Brent to $100 a barrel from $110 and lowered its 2013 forecast to $105 from $110. Oil demand in China, the world’s second- largest crude consumer, “slowed down significantly” from January to March, the bank said in a report yesterday.

China’s apparent oil consumption, or the amount of crude processed plus net imports of refined products, dropped to 9.77 million barrels a day last month, the slowest rate since October, government data show.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

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

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