WTI Oil Rises to Five-Week High on Consumer Sentiment

West Texas Intermediate crude climbed to a five-week high as U.S. consumer confidence rose in April while gasoline demand grew. Brent’s premium to WTI shrank.

WTI’s weekly advance was the biggest this year. The Thomson Reuters/University of Michigan preliminary index of sentiment climbed to 82.6, the highest level since July. Gasoline demand averaged over four weeks jumped to the most in three months April 4, the Energy Information Administration said yesterday. Prices reduced gains as U.S. equities dropped. The Brent-WTI gap contracted as Libya was poised to boost oil shipments.

“As the economy grows, oil demand will grow,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “One of the most supportive things you can say about crude is the strong gasoline demand.”

WTI for May delivery rose 34 cents, or 0.3 percent, to $103.74 a barrel on the New York Mercantile Exchange, the highest settlement since March 3. The volume of all futures traded was 31 percent above the 100-day average at 3:56 p.m. Prices advanced 2.6 percent this week.

Brent for May settlement slid 13 cents to end the session at $107.33 a barrel on the London-based ICE Futures Europe exchange. Brent gained 0.6 percent this week. Volume was 3.7 percent below the 100-day average. The European benchmark crude was at a $3.59 premium to WTI, the narrowest since Sept. 19.

Economic Outlook

The median estimate in a Bloomberg survey of economists called for the consumer confidence level to increase to 81. The Michigan survey’s index of expectations six months from now increased to 73.3, the highest since August, from 70 last month.

“The economy is getting better,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The overall trend for crude is up.”

U.S. gasoline demand averaged 8.81 million barrels a day in the four weeks to April 4, the highest level since Jan. 3, the EIA said April 9. Inventories of the fuel dropped to 210.4 million barrels, the least since Nov. 15.

“The consumer sentiment number seems to suggest that the strong gasoline demand that we’ve seen may not be a fluke,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Oil is being led by gasoline. We are seeing the Brent-WTI spread coming in due to strong U.S. demand.”

IEA Forecast

Gasoline for May delivery rose 0.65 cent, or 0.2 percent, to settle at $3.0144 a gallon on the Nymex. Volume was 81 percent above the 100-day average. Prices climbed 2.8 percent this week.

The Standard & Poor’s 500 Index fell as much as 1 percent to the lowest level since February.

Libya’s state-run National Oil Corp. lifted force majeure on the Harigsa terminal yesterday, a statement on its website showed. Vienna-based oil company OMV AG provisionally booked a tanker to load as much as a million barrels of oil from the port next week, according to two traders with knowledge of the matter.

The Brent-WTI spread may widen to “low double digits” as supplies increase at Cushing, Oklahoma, the delivery point for WTI, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said in a note today.

Cushing inventories climbed 345,000 barrels last week to 27.6 million, the first gain in 10 weeks, according to the EIA.

Implied volatility for at-the-money WTI options expiring in June was 16.4 percent, up from 16.4 yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 589,148 contracts at 3:57 p.m. It totaled 532,957 contracts yesterday, 1.2 percent below the three-month average. Open interest was 1.69 million contracts.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Margot Habiby

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