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June 4 (Bloomberg) -- West Texas Intermediate’s discount to Brent crude narrowed to the least in seven weeks as inventories declined at Cushing, Oklahoma.

The spread tightened as the Energy Information Administration reported supplies at the delivery point for WTI futures fell for a 17th time in 18 weeks in the seven days ended May 30. Total U.S. crude stockpiles decreased 3.43 million barrels, exceeding the 250,000-barrel drop expected by analysts surveyed by Bloomberg.

“The reduction in Cushing inventories should bring WTI prices closer to Brent,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The market is correctly reading this as a bullish report.”

WTI for July delivery slid 2 cents to settle at $102.64 on the New York Mercantile Exchange. The volume of all futures traded was 2.5 percent below the 100-day average for the time of day.

The spread narrowed to $5.76, the least since April 15, as Brent for July settlement slipped 42 cents, or 0.4 percent, to $108.40 a barrel on the London-based ICE Futures Europe exchange. Volume was 19 percent above the 100-day average.

Cushing inventories dropped 321,000 barrels to a five-year low of 21.4 million, according to the EIA, the Energy Department’s statistical arm. Supplies at the hub have declined since the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from the hub in January.

Stockpiles Fall

Total crude stockpiles decreased to 389.5 million barrels. They were at 399.4 million through April 25, the most since the EIA began publishing weekly data in 1982.

“The market is focusing on inventories to gain some momentum,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The concern has been Cushing, which has been keeping the market higher.”

Inventories of products increased and their prices fell. Distillate fuel stockpiles, including diesel and heating oil, gained 2.01 million barrels to 118.1 million, the most since January. Gasoline supplies rose 210,000 to 211.8 million.

Ultra low sulfur diesel for July delivery dropped 1.77 cents, or 0.6 percent, to $2.8481 a gallon on the Nymex, down for a seventh day. It’s the lowest settlement since Nov. 7.

July gasoline futures decreased 1.35 cents, or 0.5 percent, to $2.9352 a gallon, a fourth straight decline.

Refinery Rate

Refineries raised their operating rate to a one-month high of 90.8 percent from 89.9 percent. Imports of crude oil slid 686,000 barrels a day to 7.12 million. They have averaged 7.37 million in the first 22 weeks in 2014, down from 7.75 million a year earlier.

“Refinery activity starts to get really ramped up,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “It’s a modestly bullish report.”

The EIA report also showed total oil demand decreased 5 percent from the previous week to 18.6 million barrels a day. Gasoline consumption slid 206,000 barrels a day, or 2.2 percent, to 9.1 million.

“Domestic demand is weak,” O’Grady said. “You still have a very sluggish economy, and that’s going to weigh on demand.”

To contact the reporter on this story: Moming Zhou in New York at

To contact the editors responsible for this story: David Marino at Richard Stubbe

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