West Texas Intermediate crude climbed above $100 a barrel after a government report showed that inventories at Cushing, Oklahoma, the delivery point for the contract, dropped for a seventh week. Brent oil decreased.
WTI gained 0.7 percent. Supplies at Cushing slipped 989,000 barrels last week to 29.8 million, the least since January 2012, the Energy Information Administration said. Prices also rose after Enterprise Products Partners LP said yesterday it will more than double capacity on the Seaway pipeline linking Cushing and Houston. Brent fell 0.9 percent, cutting its premium to the U.S. grade.
“Prices should stay above $100 and continue rising through the end of the month based on the market fundamentals,” said Frank Curzio, an analyst at Stansberry & Associates, an investment advisory firm in Fernandina Beach, Florida.
WTI for April delivery advanced 67 cents to $100.37 a barrel on the New York Mercantile Exchange, the highest settlement since March 10. April futures expire tomorrow. The May contract rose 29 cents to $99.17. The volume of all futures traded was 26 percent above the 100-day average at 3:36 p.m.
Brent for May settlement dropped 94 cents to close at $105.85 a barrel on the London-based ICE Futures Europe exchange. Trading volume was 9.2 percent lower than the 100-day average. The European benchmark’s premium to WTI for the same month slipped to $6.68 a barrel.
Cushing stockpiles have fallen since the southern portion of the Keystone XL pipeline began moving oil to the Texas Gulf Coast in January. Enterprise said it’s looping the existing Seaway line with a parallel pipe that will boost capacity to the Houston area to 850,000 barrels a day in late May or early June.
Total crude inventories climbed by 5.85 million barrels to 375.9 million, the EIA said. A 2.75 million-barrel gain was projected, according to the median of 11 analyst responses in a Bloomberg survey.
U.S. crude production rose 33,000 barrels a day to 8.22 million, the most since 1988. Output has surged on a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies in shale formations.
Refineries operated at 85.6 percent of capacity in the seven days ended March 14, down 0.4 percentage point from the prior week, and the lowest level since April, the report showed.
“We are seeing seasonal builds in crude stocks as refineries are offline to do maintenance,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It will continue for a few more weeks.”
Supplies of distillate fuel, a category that includes heating oil and diesel, fell 3.1 million barrels last week to 110.8 million, the least since May 2008, according to the EIA, the Energy Department’s statistical arm. Gasoline stockpiles dropped 1.47 million barrels to 222.3 million.
“Refineries cut back operating rates and as a result there were drops in product inventories,” said Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at Manulife Asset Management in Boston.
Brent crude dropped on easing concern that Russian oil shipments to Europe will be disrupted because of the country’s annexation of Crimea from Ukraine. Russian President Vladimir Putin signed an accord yesterday to absorb Crimea, showing no sign of backing down from the worst confrontation with the West since the Cold War.
The Federal Reserve said it will look at a range of data in deciding when to raise interest rates, ending a pledge tying borrowing costs to a 6.5 percent unemployment rate. The Federal Open Market Committee will look at progress toward its employment and inflation goals when determining when to change rates, it said in a statement today after a meeting in Washington that was the first led by Chair Janet Yellen.
Electronic trading volume on the Nymex was 576,917 contracts at 3:36 p.m. It totaled 669,463 contracts yesterday, 29 percent above the three-month average. Open interest was 1.62 million contracts.