West Texas Intermediate traded near the highest price since October on signs that strengthening demand is depleting inventories in the U.S., the world’s biggest oil consumer.
The International Energy Agency raised estimates for global oil demand in 2014 amid an economic recovery in the U.S. Futures were little changed in New York after rising 1.2 percent yesterday. Crude stockpiles shrank by 7.5 million barrels last week, a report from the American Petroleum Institute showed yesterday. Government data to be released today is forecast to show supplies dropped by 3 million, according to a Bloomberg News survey. In Libya, three eastern ports will reopen Dec. 15, said the head of the country’s energy-protection force.
“Demand has started to surprise to the upside in the U.S. and Europe, hence we’ve seen a few short-covering rallies,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a London-based consultant. “People went short expecting oversupply and the return of Libyan barrels, but Libya has yet to return.”
WTI for January delivery was at $98.19 a barrel in electronic trading on the New York Mercantile Exchange, down 32 cents, as of 1:38 p.m. London time. The contract climbed $1.17 to $98.51 yesterday, the highest close since Oct. 28. The volume of all futures traded was about 26 percent below the 100-day average. Prices have gained 6.9 percent this year.
Brent for January settlement was down 45 cents at $108.93 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $10.73 to WTI. The spread was $10.87 yesterday, the narrowest since Nov. 8 based on closing prices.
The IEA forecast today in its monthly oil market report that world demand will increase by 1.2 million barrels a day, or 1.3 percent, to 92.4 million a day next year, raising its projection from last month by 240,000 a day. U.S. fuel use rose above 20 million barrels a day in November for the first time since 2008, according to preliminary data.
WTI advanced 5.3 percent last week, the most in five months, as U.S. crude inventories fell for the first time in 11 weeks and TransCanada Corp. announced plans to start part of its Keystone pipeline to the Gulf Coast from Cushing, Oklahoma, the delivery point for Nymex futures.
“The run of inventory increases had the market rattled, but it now appears to be reversing and the focus is coming back to global growth numbers,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “The outlook is for a test of higher levels for crude.”
Distillate stockpiles, which includes heating oil and diesel, rose by 1.18 million barrels, the API said. They’re projected to have climbed by 1.55 million in the report from the Energy Information Administration, the Energy Department’s statistical arm.
Refinery utilization probably rose by 0.5 percentage points to 92.9 percent of capacity, the fastest rate since July 2012, according to the survey. The API in Washington collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.
Disruptions in Libya led to a fourth monthly decline in supplies from the Organization of Petroleum Exporting Countries, the IEA said. The group’s output fell 160,000 barrels a day in November to 29.7 million, the agency estimated.
The Libyan ports of Es Sider and Ras Lanuf, with a combined capacity of 600,000 barrels a day, and a third port, Zueitina, will restart this month, Brigadier Idris Bukhamada, the head of the Petroleum Facilities Guard, said by phone from Ajdabiya yesterday. Ibrahim Al Jedran, a former regional PFG commander whose men blockaded five terminals starting July 28, agreed to the resumption after intervention by the Al Magharba tribe, according to Bukhamada.