West Texas Intermediate oil rose from a five-month low on speculation that demand for crude increased as refineries boosted production after ending seasonal maintenance.
Futures advanced 0.3 percent. An Energy Information Administration report tomorrow will probably show that refineries utilized 89.2 percent of capacity last week, up 0.5 percentage point from Nov. 8, according to a Bloomberg survey. Crude supplies gained a ninth week in the poll. Talks between Iran and the five permanent members of the United Nations Security Council plus Germany will resume tomorrow in Geneva.
“I’ve changed my outlook for WTI from bearish to bullish,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “We are coming out of turnaround season and can expect refiners to boost operating rates, which will increase crude demand.”
WTI for December delivery rose 31 cents to settle at $93.34 a barrel on the New York Mercantile Exchange. Futures touched $92.43, the lowest level since June 4. The volume of all futures traded was 8 percent below the 100-day average at 4:37 p.m.
Prices were little changed from the settlement after the American Petroleum Institute reported supplies rose 512,000 barrels last week. WTI climbed 32 cents, or 0.3 percent, to $93.35 a barrel at 4:37 p.m. in electronic trading. It was $93.40 before the report was released at 4:30 p.m.
Brent oil for January settlement fell $1.55, or 1.4 percent, to end the session at $106.92 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 7.3 percent below the 100-day average.
The European benchmark crude closed at a $13.03 premium to WTI for the same month, down from $14.79 at yesterday’s settle.
Refineries last week operated at the highest level since September, according to the survey. Units were idled for maintenance in September and October after the peak summer gasoline-demand season ended and before heating demand increased with the arrival of winter.
U.S. crude supplies probably rose by 1 million barrels to 389.1 million in the week ended Nov. 15, the most since June, according to the median estimate of 11 analysts surveyed by Bloomberg before tomorrow’s EIA report. Inventories climbed 32.5 million barrels in the eight weeks ended Nov. 8. The EIA is the Energy Department’s statistical unit.
“The market is stabilizing and consolidating as we wait for fresh news,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We have the weekly inventory reports tomorrow and the Iranian nuclear talks, which resume tomorrow, have been a preoccupation.”
The negotiations with Iran are aimed at reaching a deal that would relieve international sanctions on the country in exchange for curbs on its nuclear program. Iran denies allegations its atomic energy and medical research work is a cover to build weapons. An initial attempt to reach a deal faltered in the last round of talks that ended Nov. 10.
“There’s hopefulness about the resumption of talks in Geneva,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “A lot of optimism has been built in here, so watch out for the market to whipsaw on any scent that negotiations are in trouble.”
Iran’s oil output has decreased 16 percent since the U.S. and the European Union tightened sanctions in July 2012 to curb its nuclear program, a Bloomberg survey of oil companies, producers and analysts showed. Iran, OPEC’s second-biggest producer in June 2012, is now in sixth place.
“Anyone expecting a spigot of Iranian oil will open on Thursday is out of touch with what will occur, even if the talks are successful,” Evans said.
A Libyan oil terminal loaded probably its first crude cargo onto a tanker in at least a month. The Matilda, a ship able to haul about 600,000 barrels of crude, is currently loading at the Brega facility in the center-east and will depart today, Ibrahim Al Awami, the director of measurement for the oil ministry, said by phone today. Libya’s National Oil Corp. said yesterday that a tanker would load at Mellitah, a facility in the west.
Libyan output climbed 150,000 barrels a day to 450,000 in October, according to a Bloomberg survey. Output averaged about 1.3 million barrels a day in the first six months of this year before tumbling.
“Signs of some improvement in Libya are putting pressure on Brent,” Kilduff said.
WTI fell as much as 0.6 percent earlier as the Organization for Economic Cooperation and Development cut its global growth forecasts. The Paris-based OECD said the world economy will probably expand 2.7 percent this year and 3.6 percent in 2014, revised from the 3.1 percent and 4 percent predicted in May.
Implied volatility for at-the-money WTI options expiring in January was 17.9 percent, little changed from yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 505,760 contracts as of 4:38 p.m. It totaled 492,427 contracts yesterday, 15 percent below the three-month average. Open interest was 1.64 million contracts, the least since March 20.
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