WTI Trades Near Five-Week High as U.S. Crude Supplies Dip

The spread between West Texas Intermediate and Brent narrowed to the lowest intraday level in 10 days after crude inventories shrank for the first time in 11 weeks in the U.S., the world’s biggest oil consumer.

Futures rose for a fifth day in New York after gaining 1.2 percent yesterday, the longest rising streak since August. Crude stockpiles fell by 5.59 million barrels last week as refiners boosted processing, data from the Energy Information Administration show. Supplies were forecast to drop 500,000 barrels, according to a Bloomberg News survey. OPEC agreed to maintain its production ceiling at a meeting yesterday.

“The Brent-WTI spread has narrowed sharply due to a large drop in crude inventories, prompting investors to liquidate Brent-WTI positions,” Myrto Sokou, an analyst at Sucden Financial Ltd. in London, said by e-mail. “The bullish oil fundamentals report spread optimism in the market.”

WTI for January delivery was at $97.39 a barrel in electronic trading on the New York Mercantile Exchange, up 20 cents, as of 1:44 p.m. London time. The contract climbed $1.16 to $97.20 yesterday, the highest close since Oct. 29. The volume of all futures traded was about 49 percent below the 100-day average. Prices are up 6.1 percent this year.

Brent was at a premium of $14.26 to WTI, after earlier dropping to $14.06, the narrowest intraday level since Nov. 21. The spread was $14.68 yesterday. The North Sea crude for January settlement fell 21 cents to $111.67 a barrel on the London-based ICE Futures Europe exchange.

Inventory Draws

WTI reversed an earlier loss after data showed applications for U.S. employment benefits unexpectedly fell last week to the lowest level in more than two month. Jobless claims decreased 23,000 to 298,000 in the week ended Nov. 30, the Labor Department said today in Washington.

“Oil is holding these levels, which suggest further gains,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney. “It’s a combination of things: the good economic data and the inventory draws” have pushed prices higher, he said.

WTI decreased 2.2 percent last week, the seventh loss in eight weeks, as U.S. crude inventories expanded amid a surge in production. Output was down 0.1 percent at 8.01 million barrels a day in the period ended Nov. 29, according to the EIA, the Energy Department’s statistical arm.

Refineries operated at an average 92.4 percent of capacity, up 3 percentage points, the EIA said. Utilization rates climbed the most since September 2012.

Winter Demand

Crude processing has “returned to peak summer levels, this time to meet winter demand -- both domestic and for exports,” Michael Wittner, the head of oil markets research at Societe Generale SA, said yesterday in an e-mailed report.

Brent, the benchmark grade for half the world’s crude, will probably exceed $100 for a fourth year in 2014 after the Organization of Petroleum Exporting Countries bet that global demand won’t weaken enough to warrant supply cuts, according to a separate Bloomberg survey. Futures will average $105 in 2014, according to the median estimate of 31 analysts.

The North Sea blend is under pressure as Libya, Iraq and Iran seek to restore output amid disruptions from protests, sabotage and sanctions. Libya will increase production to 1.5 million barrels a day in 10 days from the current 250,000, the nation’s Oil Minister Abdulbari al-Arusi said on Dec. 3.

OPEC agreed to keep its production quota at 30 million barrels a day at least until June even as Libya, Iran and Iraq plan to boost exports in coming months. Maintaining the target, set two years ago, will ensure the stability of oil prices, Venezuela’s Energy Minister Rafael Ramirez said in Vienna.

“We have rolled it over,’” Saudi Arabia’s Ali al-Naimi told reporters at the end of three hours of closed-door talks in Vienna. “We are all satisfied.”

The 12-member group, which pumps about 40 percent of the world’s crude, is next scheduled to meet on June 11.

To contact the reporters on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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