West Texas Intermediate crude headed for its third weekly gain, the longest rising streak since February, amid declining U.S. crude stockpiles. Brent was steady in London before elections in Ukraine.
Futures rose 0.3 percent in New York. Crude inventories shrank by 7.23 million barrels last week, the most in four months, data from the Energy Information Administration showed on May 21. Fighting flared ahead of a May 25 presidential election in Ukraine as Prime Minister Arseniy Yatsenyuk said Russia’s pledges to pull troops from the border “are a bluff.”
“We’re now seeing a healthy correction in U.S. crude stocks after they reached record levels in previous weeks,” Myrto Sokou, senior analyst at Sucden Financial Ltd. in London, said by e-mail. “Oil demand has picked up recently in the U.S.”
WTI for July delivery was at $104.03 a barrel in electronic trading on the New York Mercantile Exchange, up 29 cents at 1:06 p.m. London time. The contract slid 33 cents to $103.74 yesterday. The volume of all futures traded was about 52 percent below the 100-day average for the time of day. Prices have climbed 2 percent this week and 5.7 percent this year.
Brent for July settlement was 25 cents higher at $110.61 a barrel on the London-based ICE Futures Europe exchange. It traded at a premium of $6.56 to WTI on ICE, compared with $8.17 at the end of last week.
U.S. crude inventories dropped to 391.3 million barrels in the seven days ended May 16, the lowest level in six weeks, according to the EIA. Stockpiles rose to 399.4 million through April 25, the most since the Energy Department’s statistical arm began publishing weekly data in 1982.
“The inventory draw is the key factor for oil this week,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone today. “There’s an anticipation of further increased demand as we head into the driving season” during summer in the U.S., he said.
Supplies at Cushing, Oklahoma, the delivery point for WTI, fell by 225,000 barrels to 23.2 million last week, the data show. That’s the least since since December 2008. Stockpiles at the largest U.S. oil-storage hub have decreased since the southern leg of the Keystone XL pipeline began moving crude to Gulf Coast refineries in January.
WTI may decline next week amid speculation that inventories will be ample to meet refinery demand, according to a Bloomberg News survey. Twenty of 46 analysts and traders, or 43 percent, forecast futures will drop through May 16 while 16 respondents predicted a price gain.
Brent, the benchmark grade for more than half of the world’s oil, is set for a second weekly increase amid the deadliest clash for Ukraine’s military since the secession campaign began after Russia annexed Crimea in March.
An attack by pro-Russian insurgents near Volnovakha, about 50 kilometers (31 miles) south of Donetsk, left 16 servicemen dead, First Deputy Health Minister Ruslan Salyutin said yesterday. One soldier was killed and two injured in the Luhansk region, according to the Defense Ministry.
The government in Kiev accused its eastern neighbor of seeking to destabilize the country before the ballot as Yatsenyuk called for a United Nations Security Council session on the situation. The North Atlantic Treaty Organization has estimated the number of Russian troops on the frontier at 40,000.