West Texas Intermediate traded near the highest price in a week after U.S. crude inventories dropped to the lowest level since January, shrinking the grade’s discount to North Sea Brent to the least in five trading sessions.
Futures were little changed in New York after rising 0.5 percent yesterday. Stockpiles fell by 6.9 million barrels to 367 million in their third weekly decrease, the longest run of declines this year, as refiners processed the most crude in almost eight years, the Energy Information Administration said yesterday. Gasoline and diesel demand typically increases during the peak vacation season in summer.
“U.S. demand is fairly stable,” said Andy Sommer, a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland, who predicts Brent will trade from $110 to $112 a barrel this year. “It looks like U.S. refiners are preparing for a pick-up in demand from export markets in Latin America.”
WTI for August delivery was at $106.75 a barrel, up 27 cents, in electronic trading on the New York Mercantile Exchange at 1:53 p.m. London time. The volume of all futures traded was about 18 percent below the 100-day average. The contract climbed 48 cents to $106.48 yesterday, the highest close since July 10.
Brent for September settlement slid 43 cents to $108.18 a barrel on the ICE Futures Europe exchange. The European benchmark grade’s premium to WTI contracted to as little as $1.70 a barrel, the least since July 11, from $2.26 yesterday.
U.S. refineries operated at an average 92.8 percent of capacity last week, the highest rate in a year, and processed 16.2 million barrels a day, the most since August 2005, said the EIA, the Energy Department’s statistical arm. The nation’s crude output surged to the highest since December 1990. Gasoline inventories rose by 3.1 million barrels compared with a 1.5 million decline predicted in the Bloomberg survey.
“Refineries are ramping up because of the traditional period,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney, who predicts investors may sell WTI at about $107.30 a barrel. “Consumption is seasonal. The market is certainly reacting” to the data, he said.
Crude stockpiles at Cushing, Oklahoma, the delivery point for futures traded in New York and the biggest U.S. oil-storage hub, fell by 882,000 barrels to 46.1 million, according to the EIA. That’s the lowest level since November.
China pumped crude at the fastest pace in more than two and a half years as the nation’s explorers sought to profit from rising prices. The world’s second-biggest oil consumer produced 17.44 million metric tons last month, figures from the National Bureau of Statistics in Beijing show. That’s equivalent to 4.26 million barrels a day, the highest rate since November 2010, according to Bloomberg calculations based on the data.
Saudi Arabia, the world’s largest crude exporter, shipped 7.79 million barrels a day in May, the Joint Organizations Data Initiative said on its website yesterday. That’s the most since June last year, when it sold 7.84 million.