WTI Crude Advances Most This Year on Durable Goods

West Texas Intermediate crude advanced the most this year as U.S. orders for durable goods climbed more than forecast in February. WTI’s discount to Brent was the narrowest since July.

Futures climbed to the highest level in five weeks after the Commerce Department said bookings for goods meant to last at least three years rose the most since September. Gains in WTI accelerated after the May contract breached technical resistance at $95.55. The spread between WTI and Brent, Europe’s benchmark, shrank as U.S. refinery demand and North Sea output increased.

“The durable goods number is higher than expected and it shows the U.S. economy is on good footing,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “You are continuing to see the Brent-WTI spread contract massively.”

WTI for May delivery climbed $1.53, or 1.6 percent, to $96.34 a barrel on the New York Mercantile Exchange, the biggest rally since Dec. 26 and the highest settlement since Feb. 19. Prices are up 4.9 percent in 2013. The volume of all futures traded was 3.7 percent above the 100-day average for the time of day at 3:35 p.m.

Oil slipped to $96.22 at 4:41 p.m. after the American Petroleum Institute reported that U.S. inventories increased 3.74 million barrels last week to 380.4 million.

Brent for May settlement increased $1.19, or 1.1 percent, to $109.36 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 24 percent above the 100-day average. Prices have fallen 1.6 percent in 2013. The European benchmark crude’s premium to WTI narrowed to $13.02, the least since July 3 on a settlement basis.

U.S. Economy

Durable goods orders gained 5.7 percent in February, more than the 3.9 percent forecast by economists surveyed by Bloomberg, Commerce Department data showed.

“The durable goods number is very good,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People have turned positive about the U.S. economy, and that brings up WTI more so than Brent.”

The U.S., the world’s biggest oil consuming country, accounted for 21 percent of the world’s oil consumption in 2011, according to BP Plc’s Statistical Review of World Energy.

U.S. stocks gained, with the Standard & Poor’s 500 Index up as much as 0.8 percent.

“Oil is doing beautifully,” said Jeff Grossman, president of New York-based BRG Brokerage and a Nymex floor trader. “The next real level of resistance is probably around the $97.40 area.”

Fibonacci Level

The May futures settled above $95.55, the 61.8 percent retracement level on a Fibonacci study of the drop from the 2013 high of $99.11 on Feb. 13 to the low of $89.78 on March 4.

“No one wants to be short right now,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “We went over the $95.55 major retracement level.”

Prices also advanced amid forecasts that refineries boosted production to the highest level since Feb. 1 last week, a Bloomberg survey of analysts showed.

U.S. refineries operated at 84 percent of capacity last week, an increase of 0.5 percentage point from the prior period, according to the median of analyst estimates in the survey. Utilization surged 2.5 percentage points to 83.5 percent in the week ended March 15 after falling to 81 percent in the seven days to March 8, the weakest level since February 2011.

Refinery units are often idled for maintenance in February and March as attention shifts away from heating oil and before gasoline consumption rises during the summer months.

U.S. Supply

Oil inventories probably rose 1.33 million barrels to 384 million last week as domestic production stayed near the most in 21 years and imports rebounded, the survey showed.

Inventories of distillate fuel, a category that includes heating oil and diesel, probably fell 850,000 barrels to 118.9 million, according to the median of responses in the Bloomberg survey. Gasoline stockpiles probably slid 1 million barrels to 221.8 million, the survey predicted.

Brent oil in London lagged WTI’s advance as exports of the 12 main North Sea crude grades will rise by 3.4 percent in April to 1.98 million barrels a day, according to loading programs obtained by Bloomberg.

Implied volatility for at-the-money WTI crude options expiring in May was at 16.3 percent, down from 17.1 percent yesterday. The figures have slipped from 24.7 percent on Feb. 21.

Electronic trading volume on the Nymex was 491,354 contracts as of 4:34 p.m. It totaled 644,014 contracts yesterday, 18 percent above the three-month average. Open interest was 1.67 million contracts.

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