West Texas Intermediate snapped four days of losses before U.S. data that’s forecast to show crude stockpiles dropped in the world’s largest oil consumer.
Futures rose as much as 0.6 percent before a U.S. government report today that may show inventories slid 1 million barrels to an 18-month low last week. The industry-funded American Petroleum Institute said supplies fell 54,000 barrels. WTI dropped to the lowest close in eight weeks yesterday on speculation that U.S.-Iranian relations are thawing and as the threat of an American military strike on Syria receded.
“There’s good support for prices at these levels, and the data is the trigger for them to go higher,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney, said by phone today. “A lot of the risk premium we saw earlier in the month has come off as tensions in the Middle East abate, and now the market’s all about supply and demand. And with inventories expected to show a fall, we could see prices rise.”
WTI crude for November delivery advanced as much as 61 cents to $103.74 a barrel on the New York Mercantile Exchange and was at $103.61 at 2:57 p.m. in Singapore. Futures slid 4.6 percent over the previous four sessions. The volume of all futures traded was 41 percent below the 100-day average. Prices are up 7.3 percent this quarter and 13 percent higher in 2013.
Brent oil for November settlement gained 44 cents, or 0.4 percent, to $109.08 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $5.47 to WTI today. The spread was at $5.51 yesterday, the widest since Sept. 6.
U.S. crude inventories fell 0.3 percent to 354.6 million barrels as of Sept. 20, according to the median of 10 analyst estimates surveyed before the Energy Information Administration report. Supplies probably dropped as refineries operated at more than 90 percent of capacity and oil imports slipped.
The EIA, the U.S. Energy Department’s statistical arm, is scheduled to release its inventory report at 10:30 a.m. today in Washington. The data will show stockpiles of gasoline slid 750,000 barrels, and middle distillates, a category that includes heating oil and diesel, slipped 925,000 barrels last week, according to the Bloomberg survey.
The American Petroleum Institute’s weekly report yesterday showed distillate fuel inventories rose 485,000 while gasoline stockpiles increased 341,000 barrels. API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.
Supplies slipped in 10 of the past 12 EIA reports as refineries operated near the highest rates of the year. Plants have slowed fuel output in the third quarter of each year since 1999 as they implemented maintenance programs. Crude imports decreased during September in four of the past five years.
Refineries probably ran at 91.6 percent of capacity on Sept. 20, down 0.9 percentage point from a week earlier, the survey showed. Utilization rates reached an annual high in June or July during the summer driving season in eight of the past 10 years. Units are often idled in September and October for maintenance as attention shifts away from gasoline and before heating-oil demand peaks.
Oil rose to a two-year high on Aug. 28 amid concern that a U.S.-led assault would widen the Syrian conflict and disrupt Middle East shipments. Syria borders Iraq and is near Iran, which together control almost a fifth of the production capacity in the Organization of Petroleum Exporting Countries, according to data compiled by Bloomberg.
The United Nations Security Council is set to negotiate a Syria resolution. The U.S., the U.K. and France have accused government forces of carrying out a chemical attack on Aug. 21 that killed 1,400 people near Damascus. Syrian President Bashar al-Assad has blamed rebel groups. Russia rejected a plan to include enforcement in the resolution.
Separately, U.S. President Barack Obama welcomed overtures from Iran as a chance to resolve diplomatically the confrontation over the Persian Gulf nation’s nuclear program, even as Iranian officials told the U.S. that the time isn’t right for direct contact between the two countries’ leaders.
Deutsche Bank AG increased its forecasts for WTI and Brent crude this year as prices rose in the third quarter amid stoppages in Libya and the threat of strikes against Syria. The bank raised its outlook for WTI by 5 percent to $99.88 barrel and Brent by 1.8 percent to $109 a barrel, according to a report e-mailed today.