WTI Heads for Weekly Gain as Crude Stockpiles Drop

West Texas Intermediate headed for its first weekly advance in three as crude supplies shrank for the first time in more than a month in the U.S., the world’s biggest oil consumer. Brent rose as the European Union considered expanding sanctions on Russia.

Futures increased as much as 0.9 percent in New York. Crude stockpiles fell by 1.78 million barrels last week as inventories at Cushing, Oklahoma, the delivery point for WTI, slid to the lowest level since December 2008, data from the Energy Information Administration show. The European Union is ready to expand sanctions to some Russian companies, two officials said.

“It’s mainly because of stocks drawdowns in Cushing,” Abhishek Deshpande, an analyst at Natixis SA in London, said in an e-mailed response to questions about rising prices. The crisis in Ukraine “is adding some uncertainty to oil.”

WTI for June delivery climbed as much as 92 cents to $101.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.71 at 1:10 p.m. London time. The contract decreased 51 cents to $100.26 yesterday. Prices have gained 0.9 percent after two weekly losses.

Brent for June settlement rose as much as 98 cents, or 0.9 percent, to $109.02 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.89 to WTI on ICE, compared with $8.83 on May 2.

Oil Stockpiles

WTI fell 0.8 percent last week as U.S. crude inventories expanded to the highest level since the EIA began publishing weekly reports in 1982. Supplies slid to 397.6 million barrels in the seven days ended May 2, the first decline in five weeks, according to the Energy Department’s statistical arm.

“The decline in stockpiles was a surprise; I expected there to be more builds,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, who predicts investors may sell WTI contracts if prices rise to $101 a barrel.

Futures will probably rise next week amid speculation that stockpiles will shrink further, a Bloomberg News survey shows. Seventeen of 37 analysts and traders, or 46 percent, forecast oil will advance through May 16. Sixteen respondents estimated a price decrease.

Russia Sanctions

Amid the rising tension in Ukraine, the 28 EU nations are preparing to impose sanctions on some Russian companies, and a list of targets may be approved by foreign ministers as soon as May 12, according to the two officials from member countries, who spoke in Washington on condition they not be identified because of the sensitivity of the issue.

Ukraine’s government and its U.S. and European allies say there’s no sign of a Russian pullback from the border. They accuse President Vladimir Putin of fomenting separatist unrest in eastern Ukraine and warn that he may follow the annexation of Crimea in March with another land grab.

Putin yesterday presided over nationwide military exercises, a day after he softened his tone by promising to withdraw troops from the frontier, voicing support for Ukraine’s presidential election and saying it’s not the right time for a referendum on secession in the Donetsk and Luhansk regions. Russia, the world’s largest energy exporter, held army parades today to celebrate victory in World War II.

The tensions between Ukraine and Russia “will continue to be a worry in the market,” Jens Naervig Pedersen, a commodities analyst at Danske Bank A/S, said by phone from Copenhagen.

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

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

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