West Texas Intermediate crude rose for the first time in three days as stockpiles at Cushing, Oklahoma, tumbled to the lowest level since February 2012 and refinery utilization climbed.
Prices advanced 17 cents. Inventories at Cushing, the delivery point for New York-traded futures, slid for a 10th week, the longest stretch in two years, according to data from the Energy Information Administration. Refineries ran at 92.5 percent of capacity, the highest level for this time of year since 2006. Futures fell earlier as President Barack Obama postponed a decision on military strikes against Syria.
“It’s a good sign that Cushing oil is making its way to outside markets,” said Jacob Correll, a Louisville, Kentucky-based commodity analyst at energy management firm Schneider Electric Professional Services. “The refinery runs are very high and should be supportive. There is further uncertainty as to whether or not a strike will be launched.”
WTI for October delivery settled at $107.56 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 14 percent below the 100-day average at 3:48 p.m. Prices have advanced 17 percent this year.
Brent for October settlement gained 25 cents, or 0.2 percent, to end the session at $111.50 a barrel on the London-based ICE Futures Europe exchange. Volume was 15 percent above the 100-day average. The European benchmark crude was at a premium of $3.94 to WTI. It shrank to $3.86 yesterday, the narrowest level on a settlement basis since Aug. 19.
Inventories at Cushing have tumbled 31 percent since June as improved pipeline networks and shipments by rail eased a North American supply glut created by rising oil production from shale formations.
They slipped 639,000 barrels last week to 34.1 million, the EIA, the Energy Department’s statistical arm, reported. Domestic production increased to 7.75 million barrels a day, the highest level since May 1989.
U.S. refineries boosted their operating rate for a fourth week, gaining 0.8 percentage point to an eight-week high. The rate has increased 3.1 percentage points since Aug. 9.
Rising refinery utilization “increases the demand for crude oil, which has translated into a drawing of Cushing inventories,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
“U.S. refineries continue to kick into high gear,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s huge for this time of year and the market is reflecting that fact.”
Total crude inventories decreased 219,000 barrels last week to 360 million, the EIA said. Analysts surveyed by Bloomberg had forecast a drop of 2.1 million. Supplies slipped for the ninth time in 11 weeks.
Gasoline stockpiles rose 1.66 million barrels to 217.6 million, and distillate fuels, which include diesel and heating oil, gained 2.59 million barrels to 132.2 million, the EIA said. Analysts had expected a drop of 1 million barrels in gasoline and a gain of 600,000 barrels in distillates.
“The crude draw is less than expected,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “Crude probably should move lower.”
Obama said yesterday that he would pursue a Russian proposal to have Syria surrender its stockpiles of chemical arms to international authorities.
The president announced 10 days ago that he would ask Congress to authorize a military strike against Syrian President Bashar al-Assad’s regime for allegedly using chemical weapons against civilians. Obama said he would give the Russian proposal a chance in a nationally televised address yesterday.
Assad’s government has agreed to the plan to give up the weapons, the Interfax news agency yesterday cited Syrian Foreign Minister Walid al-Muallem as saying. France said it will submit a plan to the United Nations to confiscate the country’s chemical weapons.
Worries that an escalation of the conflict in Syria may disrupt regional oil supplies pushed prices to a two-year high on Aug. 28.
The Middle East accounted for 35 percent of global oil production in the first quarter of this year, according to the International Energy Agency. Syria borders Iraq and is near Iran, countries that together hold almost a fifth of the output capacity from the Organization of Petroleum Exporting Countries, Bloomberg estimates show.
Implied volatility for at-the-money WTI options expiring in November was 22.1 percent, down from 25.1 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 475,416 contracts as of 3:48 p.m. It totaled 672,581 contracts yesterday, 6.3 percent above the three-month average. Open interest was 1.9 million contracts.
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