WTI Trades Near Three-Day High as Oil Stockpiles Seen Shrinking

West Texas Intermediate traded near a three-day high on speculation U.S. crude inventories declined for a third week, signaling increased demand in the world’s biggest oil consumer.

Futures gained as much as 0.8 percent in New York after rising by 0.4 percent yesterday. Stockpiles probably dropped by 1.88 million barrels to the lowest level in five months, according to a Bloomberg News survey before a report tomorrow from the Energy Information Administration, the Energy Department’s statistical arm. Refiners typically boost output in the summer to meet peak motor-fuel consumption. Gasoline prices at U.S. filling stations climbed this week by the most since February, EIA data showed.

Oil demand in the U.S. is “rather good, with refinery throughput quite impressive,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. Refining runs are near highs for the year, he said. “Fuel demand has been on the mend.”

WTI for August delivery rose as much as 86 cents and was at $106.91 a barrel in electronic trading at 8:47 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 14 percent below the 100-day average. The contract gained 37 cents yesterday to $106.32, the highest close since July 10.

Brent for August settlement, which expires today, was up 37 cents at $109.46 a barrel on the London-based ICE Futures Europe exchange. The more active September future rose 39 cents to $108.47. The European benchmark grade was at a premium of $2.52 to WTI. The spread was $1.99 on July 10, the narrowest based on closing prices since November 2010.

Fuel Supplies

WTI surged to $107.45 a barrel in intraday trading on July 11, the highest price since March 2012, after EIA data showed U.S. crude stockpiles declined for a second week as refiners boosted processing. Supplies dropped 20.2 million barrels to 373.9 million in the 14 days ended July 5, the largest two-week decline since at least 1982.

U.S. motor-fuel demand typically rises from Memorial Day in the last weekend of May to Labor Day in early September, the nation’s peak vacation season.

Gasoline inventories fell by 1.7 million barrels last week, according to the median estimate of eight analysts surveyed by Bloomberg. Distillate supplies, including heating oil and diesel, probably gained by 1.5 million barrels.

Factory Output

The American Petroleum Institute is scheduled to release separate inventory data today at 4:30 p.m. in Washington. The industry group 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 for its weekly survey.

Regular, unleaded gasoline at U.S. filling stations climbed 14.7 cents from a week earlier to $3.639 a gallon, the highest price since June 10 and 32 percent above the five-year average, the EIA said on its website yesterday. This week’s gain was the biggest since Feb. 4.

U.S consumer prices increased in June by 1.8 percent from a year earlier, the Labor Department reported today. The gain was more than the 1.6 percent expected, according to the median estimate of economists surveyed by Bloomberg News before the release of the figures in Washington. The increase follows a 1.4 percent gain in May and is below the Federal Reserve’s 2 percent goal.

The U.S. accounted for 21 percent of global oil consumption last year, compared with 11 percent for China, the second-largest consumer, the International Energy Agency said July 11 in its latest oil-market report.

Goldman Sachs Group Inc. said risks to Brent prices have shifted “to the upside” amid political threats to supply and production losses in the Organization of Petroleum Exporting Countries. Reduced output in Libya, Iraq and Nigeria have the potential to limit the availability of oil, according to an e-mailed report. The bank forecast Brent will trade at an average of $105 a barrel in the second half.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Sherry Su in London at lsu23@bloomberg.net

To contact the editors responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net; Stephen Voss at sev@bloomberg.net

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