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WTI Discount to Brent Narrows on U.S. Stockpiles

Feb. 26 (Bloomberg) -- West Texas Intermediate crude’s discount to Brent narrowed to the least since October before data forecast to show that distillate fuel inventories declined for a seventh week in the U.S., the biggest oil consumer.

WTI rose as much as 0.8 percent in New York, shrinking the discount to North Sea Brent to the least since Oct. 9. Distillate stockpiles, including heating oil and diesel, probably dropped by 1.25 million barrels, according to the median estimate of 10 analysts surveyed by Bloomberg before the report from the Energy Department today. Temperatures will be 15 degrees Fahrenheit or more below normal from Montana to western New York through March 1, according to Commodity Weather Group LLC in Bethesda, Maryland.

“Today, market participants will pay close attention to the U.S. weekly fuel inventory numbers,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mailed report. “As far as WTI prices are concerned in the near term, it is the weather outlook that is the most important. Heating demand remains fairly decent.”

WTI for April delivery advanced as much as 76 cents to $102.59 a barrel in electronic trading on the New York Mercantile Exchange, trading at $102.37 as of 1:24 p.m. London time. The contract dropped to $101.83 yesterday, the lowest settlement since Feb. 14. The volume of all futures traded was 15 percent above the 100-day average.

The U.S. benchmark crude’s discount to Brent on the ICE Futures Europe exchange in London shrank to as little as $6.75 a barrel. Brent for April settlement slipped 2 cents to $109.49 a barrel on ICE.

Cushing Inventories

WTI advanced in the six weeks through Feb. 21, the longest rising streak in a year, as winter storms bolstered heating demand in the U.S. and inventories shrank at Cushing, the delivery point for New York-traded contracts.

Crude stockpiles at the storage hub fell by 1.07 million barrels in the week ended Feb. 21, the American Petroleum Institute reported yesterday. Supplies nationwide expanded by 822,000 barrels, said the industry group in Washington.

“We need to care more about inventories in Cushing than total crude-oil stocks,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “If Cushing inventories decrease, it’s going to be a positive factor for WTI.”

The API collects stockpile 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.

Crude inventories nationwide probably rose by 1.275 million barrels last week, according to a Bloomberg News survey of analysts before data from the Energy Information Administration, the Energy Department’s statistical unit, later today.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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