WTI Trades Near One-Week High as Cushing Inventories Fall

West Texas Intermediate rose to a two-week high after crude stockpiles fell at the main U.S. oil storage hub. Brent gained in London as most Libyan oil fields remained shut.

U.S. futures advanced as much as 0.9 percent after closing above $100 a barrel yesterday for the first time in a week. Supplies at Cushing, Oklahoma, the delivery point for WTI, shrank for the eighth week to the lowest in two years, the Energy Information Administration said. Applications for U.S. unemployment benefits unexpectedly declined last week to an almost four-month low.

“Oil had a pretty neutral reaction to U.S. jobless claims, even though the numbers were slightly better than expected,” said Michael Hewson, an analyst at CMC Markets Plc in London. “We got our move beforehand.”

WTI for May delivery gained as much as 94 cents to $101.20 a barrel in electronic trading on the New York Mercantile Exchange, the highest intraday level since March 11, and was at $101.07 at 12:32 p.m. London time. The contract gained $1.07 yesterday to the highest settlement since March 19. The volume of all futures traded was about 17 percent above the 100-day average. Prices are up 2.7 percent this year.

Brent for May settlement gained 60 cents to $107.63 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.50 to WTI.

Jobless Claims

Jobless claims in the U.S. decreased by 10,000 to 311,000 in the period ended March 22, Labor Department data showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for 323,000 claims. The four-week average of applications filed with state agencies dropped to the lowest level since September.

U.S. President Barack Obama said yesterday after a meeting with European leaders that there were consequences for being complacent over the annexation of Crimea from Ukraine and warned that Russia can’t run “roughshod” over its neighbors.

Cushing stockpiles decreased by 1.33 million barrels to 28.5 million in the week ended March 21, according to the EIA, the Energy Department’s statistical unit. Stockpiles started falling in January after the southern link of TransCanada Corp.’s Keystone XL pipeline to the Texas Gulf Coast opened, easing a bottleneck from the storage hub.

Crude Inventories

Brent may move into a contango structure, where the front-month contract trades lower than later months, according to Petromatrix GmbH.

The Energy Department report “does not paint a picture of the U.S. having to pull on seaborne barrels and this is not a positive input for Brent,” Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix, said in an e-mailed note. There is also a lack of exports to Asia, he said.

Inventories along the Gulf of Mexico, known as PADD 3, rose 6.06 million barrels to 200.3 million, the most since EIA data began in 1990 and the 10th weekly gain. The pipelines from Cushing to Houston move oil to PADD 3 from PADD 2, which includes Oklahoma.

Total U.S. crude inventories expanded by 6.62 million barrels to 382.5 million, the EIA said, compared with a projected increase of 2.5 million.

Gasoline consumption rose 5.8 percent last week to 9 million barrels a day, the highest level since Dec. 20, EIA data show. Supplies of the motor fuel fell by 5.1 million barrels to 217.2 million. Distillate stockpiles, including heating oil and diesel, increased by 1.56 million barrels to 112.4 million.

U.S. oil production slid 0.3 percent to 8.19 million barrels a day, down from the highest rate in almost 26 years the previous week, according to the EIA.

Libya Output

Libya, with an output capacity of 1.5 million barrels a day, is producing 171,000 barrels a day as ports and fields remain shut, Mohamed Elharari, a spokesman for state-run National Oil Corp., said by phone yesterday. The government is negotiating with protesters about restarting the Sharara oil field, the country’s second-largest, he said.

The Houston Ship Channel, home to the largest U.S. petrochemical complex and export port, reopened all lanes of traffic yesterday for the first time since a March 22 oil spill.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Rachel Graham, James Herron

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