WTI Oil Rises a Second Day on Supply Outlook

West Texas Intermediate advanced for a second day amid forecasts that crude stockpiles dwindled last week in the U.S., the world’s largest oil consumer.

Futures rose as much as 1 percent in New York. U.S. inventories probably shrank by 2 million barrels last week as refineries increased operations, a Bloomberg News survey showed before a government report tomorrow. World oil consumption will rise in the second half of this year as economic growth continues to recover, Goldman Sachs Group Inc. said today.

WTI “continues to benefit from a more positive outlook for the U.S. economy and, most importantly, decent summer refinery runs,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who predicts the U.S. benchmark may struggle to exceed $96 a barrel this month because of limited investor demand for anything but the lowest-risk assets.

WTI for August delivery was at $95.65 a barrel, up 47 cents, in electronic trading on the New York Mercantile Exchange at 1:09 p.m. London time. The volume of all futures traded was 74 percent higher than the 100-day average. The contract climbed $1.49, or 1.6 percent, to $95.18 yesterday, the biggest daily gain in percentage terms since June 3. Prices have slipped 1.5 percent this quarter, curbing their gains in 2013 to 4.2 percent.

Brent for August settlement was at $101.46 a barrel, up 30 cents on the London-based ICE Futures Europe exchange, leaving the European benchmark grade at a premium of $5.81 to WTI. The spread was $5.98 yesterday, the narrowest since January 2011, based on closing prices. Brent has lost 8.7 percent in the second quarter, and about the same amount this year.

Financial Stimulus

North Sea Brent has slumped about 4 percent in the past week amid speculation that the U.S. Federal Reserve may curtail stimulus measures and concern that a cash crunch in China will hinder economic growth. Fed Chairman Ben S. Bernanke signaled June 19 that the U.S. central bank may scale back its bond-buying program this year. Money-market rates in China, the world’s largest energy user, climbed to a record last week.

Crude prices are “acceptable” for oil producers and consumers, requiring no emergency discussions by the Organization of Petroleum Exporting Countries before the group’s next scheduled meeting in December, said Suhail Mohammed Al Mazrouei, oil minister of the United Arab Emirates, according to state news agency WAM.

Goldman Outlook

U.S. gasoline inventories probably increased by 1 million barrels in the week ended June 21, according to the median estimate of nine analysts surveyed before the scheduled release of the Energy Information Administration report tomorrow at 10:30 a.m. Washington time. Distillate-fuel supplies, including heating oil and diesel, are forecast to have risen by 1 million barrels.

Refineries probably operated at 89.6 percent of capacity last week, up 0.3 percentage points from the prior period, the survey showed. That would be the highest rate since December. Plants typically boost output this time of year to meet U.S. summer demand for motor fuel.

The government report will follow separate inventory data from the American Petroleum Institute to be released later today. The industry group collects the information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.

Nigerian Cargoes

“Global demand is picking up, both seasonally as we come out of the weakest period in the second quarter and on a year-over-year basis as global growth continues to recover, despite the recent China downgrade,” Stefan Wieler, a Goldman Sachs commodity analyst in New York, said in an e-mailed report. “We expect fundamentals to improve further going into the second half of 2013.”

The loss of “substantial volumes” of crude production from Libya, Iraq, Syria, Nigeria, Sudan and South Sudan also “creates growing upside risk,” Wieler said.

In Nigeria, Africa’s biggest oil producer, three cargoes of Usan crude originally scheduled for loading in July have been deferred until August, according to two people with knowledge of the loading program. Each cargo holds 1 million barrels. Exports of the grade have been disrupted because of a technical fault.

WTI dropped earlier after Enbridge Inc. (ENB), the largest transporter of Canadian crude to the U.S., said it restarted a segment of a pipeline system.

Enbridge restored operations on the southern segment of the Athabasca pipeline network and will restart other lines over the next “several days,” it said yesterday. The Calgary-based company shut the Athabasca and Waupisoo systems, which have a total capacity to move as much as 1.17 million barrels a day, after finding a 750-barrel spill on June 22 from Line 37, a link serving Nexen Inc.’s Long Lake oil-sands complex.

Canada supplied more than one quarter of U.S. crude imports last year, according to data from the EIA, the Energy Department’s statistical arm.

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 at sev@bloomberg.net

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