West Texas Intermediate crude traded near the highest price in more than four months before a government report that will probably show U.S. stockpiles declined as refinery processing increased.
Futures were little changed in New York after slipping 8 cents yesterday from the highest settlement since January. U.S. crude supplies probably fell by 500,000 barrels last week, according to a Bloomberg survey before tomorrow’s report from the Energy Information Administration. Refineries typically boost output this time of year to meet summer demand for motor fuel. Syrian President Bashar al-Assad warned Europe will “pay the price” for arming rebels trying to topple him.
“It will be supportive for WTI at least if U.S. crude stocks fall,” said Bjarne Schieldrop, chief commodity analyst in Oslo for Stockholm-based bank SEB AB. “It will draw attention to the fact that the U.S. is both on a positive path and in a seasonally strong oil demand period of the year.”
WTI for July delivery was at $98.11 a barrel, up 34 cents, in electronic trading on the New York Mercantile Exchange at 1:34 p.m. London time. The volume of all futures traded was 8 percent below the 100-day average. The contract rose 1.2 percent to $97.85 on June 14, the highest close since Jan. 30. WTI traded yesterday as high as $98.74, the most since Sept. 17.
Brent for August settlement rose 43 cents to $105.90 a barrel on the London-based ICE Futures Europe exchange. The contract yesterday dropped 46 cents to $105.47. The European benchmark grade was at a premium of $7.54 to WTI futures. The spread was $7.44 yesterday, the narrowest based on closing prices since January 2011.
U.S. gasoline inventories probably climbed by 500,000 barrels in the week ended June 14, according to the median estimate of 10 analysts that Bloomberg surveyed before the EIA report. Distillate-fuel supplies, including heating oil and diesel, gained 925,000 barrels, the survey shows.
Refineries probably operated at 88 percent of capacity, up 0.5 percentage points from the prior week, the Bloomberg survey shows. The U.S. Memorial Day holiday on May 27 marked the start of the nation’s peak driving period.
The American Petroleum Institute in Washington is scheduled to release separate data today. The industry group collects the information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey.
Oil’s advance is stalling near its 30-day Bollinger Band, signaling a technical-resistance area where sell orders may be clustered, according to data compiled by Bloomberg. WTI’s band is around $98.15 a barrel today and Brent’s indicator is at $105.90. WTI fell in April while Brent decreased in February after a similar chart pattern.
“Geopolitical issues out of the Middle East and prospects of a U.S. recovery are helping oil to maintain these levels,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “There’s a general view that people are more optimistic,” he said, predicting investors may sell WTI contracts at about $98.50 a barrel.
Renewed concern that the conflict in Syria will spread to other parts of the Middle East drove oil higher on June 14, helping prices cap a two-week rally.
Backed by Lebanon’s Shiite militia Hezbollah and aid from Iran and Russia, Assad’s troops have shifted the momentum in Syria’s civil war with an offensive against the rebels. President Barack Obama last week ratcheted up U.S. support for the rebels with a decision to send them light arms.
“The Syrian situation is definitely going in the wrong direction,” SEB’s Schieldrop said. “The whole Middle East is being polarized in a division between Sunni and Shiite Muslims. It will be supportive for oil.”
Iranian President-elect Hassan Rohani said yesterday he seeks to ease tension with the U.S. and reduce the sanctions that have crippled his nation’s economy. Rohani, in the first news conference since his surprise first-round victory last weekend, said he will pursue a policy of moderation. He takes office in August.
“If he’s moderate and prepared to discuss, that will reduce sanctions and increase oil production, which will calm prices,” said Robert Montefusco, a senior broker at Sucden Financial Ltd. in London.