WTI Set for Best Month Since August Before U.S. Oil Data

West Texas Intermediate headed for its strongest month since August on signs of shrinking crude stockpiles and better-than-expected growth in the U.S., the world’s biggest oil-consuming country.

Futures gained as much as 0.7 percent and have advanced 7 percent this month. Gross domestic product rose at a 1.7 percent annualized rate after a 1.1 percent gain the prior quarter, Commerce Department figures showed today. A U.S. government report is forecast to show crude supplies slid by 2.45 million barrels last week, according to a Bloomberg survey of analysts. Brent fell to its lowest level in more than three weeks as Sudan was said to postpone a plan to halt oil exports.

“U.S. refinery activity is very high, which can explain the continued decline in crude stocks,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “But fuel demand is still lackluster, which means fuel stocks are still quite high and have risen of late.”

WTI for September delivery rose as much as 75 cents to $103.83 a barrel in electronic trading on the New York Mercantile Exchange and was at $103.23 as of 9:17 a.m. The volume of all futures traded was 19 percent below the 100-day average. The contract fell $1.47 yesterday, dropping the most since July 24 and closing at the lowest level since July 3.

Fuel Stockpiles

Brent for September settlement fell as much as 90 cents to $106.01 a barrel on the London-based ICE Futures Europe exchange, its lowest level since July 5. The European benchmark was at a premium of $2.78 to WTI, compared with $3.83 yesterday.

South Sudan stopped shutting its oilwells after neighboring Sudan postponed a plan to block exports, signaling production of its low-sulfur crude that’s prized by Japanese buyers will continue for at least three more weeks.

“We will instruct the oil companies operating in South Sudan not to shut down as scheduled,” Nicodemus Ajak Bior, a spokesman for South Sudan’s Petroleum Ministry, said in a phone interview yesterday from Juba, the capital.

The American Petroleum Institute said yesterday that stockpiles decreased by 740,000 barrels last week and that gasoline supplies increased by 1.8 million barrels. A report today from the Energy Information Administration, the Energy Department’s statistical unit, will probably show gasoline stockpiles declined by 1.5 million barrels, according to the median estimate of 12 analysts in the Bloomberg survey.

Inventory Data

Distillate inventories, a category that includes heating oil and diesel, decreased by 497,000 barrels last week, the API said. They are projected to increase by 450,000 barrels in the EIA report, due for release at 10:30 a.m. in Washington, according to the survey.

The API in Washington collects 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.

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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