Oil Near Two-Week High on U.S. Supplies; Brent Tops $110

Oil traded near its highest in two weeks in New York on forecasts that crude inventories fell in the U.S., the world’s largest consumer of the commodity. Brent surpassed $110 a barrel for the first time in 11 weeks.

West Texas Intermediate futures were little changed, recouping an earlier loss of 0.5 percent. U.S. crude stockpiles probably dropped 1.6 million barrels last week, according to a Bloomberg News survey of nine analysts before an Energy Department report tomorrow. Tropical storm Ernesto was forecast to become a hurricane as it heads for Mexico’s Bay of Campeche.

“The market has been bolstered by significant crude stock drawdowns reported in recent weeks,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “There’s probably a bit of additional support coming from Ernesto, set to become a hurricane by late tonight.”

Crude for September delivery was at $92.52 a barrel in electronic trading on the New York Mercantile Exchange at 1:12 p.m. London time, having slid as much as 42 cents to $91.78 a barrel. It settled yesterday at $92.20, the highest level since July 19. Prices are 6.4 percent lower this year.

Brent crude for September settlement rose above $110 a barrel for the first time since May 17. It climbed as high as $110.45, and was up 90 cents at $110.40 on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $17.89 from $17.35 yesterday.

North Sea Loadings

Daily exports of North Sea Brent, Forties, Oseberg and Ekofisk crudes, which make up the Dated Brent benchmark, in September will be 7 percent less than this month, loading programs obtained by Bloomberg News show.

Exports will be 720,000 barrels a day versus 774,194 barrels in August, according to the plans. That is the lowest in at least five years. Dated Brent is used to price more than half of the world’s oil supplies.

Loading programs are monthly schedules of crude shipments compiled by field operators to allow buyers and sellers to plan their supply and trading activities.

Tropical Storm Ernesto was forecast to strengthen on its path to the Bay of Campeche, home to most of Mexico’s crude production. The hurricane center’s tracking map shows Ernesto making landfall tomorrow on the northern coast of Belize, crossing the Yucatan into the bay as a tropical storm and then returning to land in southern Mexico.

Petroleos Mexicanos, Mexico’s state-owned oil company, has wells in the Bay of Campeche including the Cantarell and Ku-Maloob-Zaap production areas. Mexico was the third-largest oil exporter to the U.S. in 2011, supplying 1.1 million barrels a day, data from the U.S. Energy Department show.

Chevron Refinery

Crude stockpiles dropped 1.6 million barrels, or 0.4 percent, to 372 million in the seven days ended Aug. 3, according to the median of nine analyst estimates before an Energy Department report tomorrow. The decrease would leave supplies at the lowest level since April 13. Oil inventories plummeted 6.52 million barrels in the week ended July 27, the biggest slide since December.

Separately, Chevron Corp. said it contained a fire that broke out in the crude unit at its Richmond refinery, the largest in northern California.

The company was bringing down units after a blaze at the No. 4 crude unit started yesterday around 6:15 p.m. local time, according to a person with direct knowledge of the operation who asked not to be identified because the information isn’t public.

Flames were brought under control as of 10:30 p.m. local time, and all employees at the refinery have been accounted for, said Melissa Ritchie, a Chevron spokeswoman at the plant. The plant reported an evacuation after the fire broke out, a filing with the California Emergency Management Agency shows.

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