West Texas Intermediate rebounded from four days of losses before U.S. data that’s forecast to show stockpiles dropped in the world’s largest oil consumer.
Futures rose as much as 0.7 percent before the government report today that may show crude inventories slid 1 million barrels to an 18-month low last week. WTI dropped to the lowest close in eight weeks yesterday on speculation that U.S.-Iranian relations are thawing. Citigroup Inc. still raised its 2014 Brent forecast today, citing an increase in geopolitical risk, according to an e-mailed report today.
“U.S. inventory figures will be one of the highlights today, especially as we’re moving out of driving season,” said Thina Saltvedt, an analyst at Nordea Bank AG in Oslo. “Things are calming down in Libya with production coming back. Iran is back to negotiating, but there are still some doubts there.”
WTI crude for November delivery advanced as much as 73 cents to $103.86 a barrel on the New York Mercantile Exchange and was at $103.71 as of 1:03 p.m. in London. Futures slid 2.7 percent over the previous four sessions. The volume of all futures traded was 17 percent below the 100-day average. Prices are up 7.1 percent this quarter and 12 percent in 2013.
Brent for November settlement gained 98 cents, or 0.9 percent, to $109.73 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $5.98 to WTI, compared with $5.93 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, lost 925,000 barrels last week, according to the Bloomberg survey.
The industry-funded American Petroleum Institute said yesterday crude supplies fell 54,000 barrels. Distillate inventories rose 485,000 barrels, while gasoline stockpiles increased 341,000 barrels, it said. The 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. 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. The United Nations Security Council is set to negotiate a Syria resolution.
U.S. President Barack Obama yesterday 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.
There has been a “big jump on the bullish geopolitics side,” Seth Kleinman, an analyst at Citigroup in New York, said in the report. The bank raised its 2014 Brent forecast to $108 a barrel from $99.
Deutsche Bank AG also increased its forecasts for WTI and Brent this year after prices rose in the third quarter. The bank raised its outlook for WTI by 5 percent to $99.88 barrel and Brent by 1.8 percent to $109, according to a research report.