WTI Oil Near Two-Week High; U.S. Stockpiles Seen Falling

West Texas Intermediate traded near the highest level in almost two weeks on speculation that U.S. crude stockpiles shrank for the first time in a month, signaling increased demand in the world’s largest oil consumer.

Futures gained as much as 0.5 percent after rising yesterday amid signs of U.S. economic growth and concern that unrest in Egypt may spread and disrupt Middle Eastern oil supply. Crude inventories probably fell by 2.63 million barrels last week, a Bloomberg News survey showed before a government report tomorrow. The American Petroleum Institute is to release separate supply data later today. U.S. factory orders may have risen 2 percent in May, a separate Bloomberg survey showed.

“The U.S. durable goods and factory orders data is the main focus for the day and will be interesting to see after decent PMI manufacturing data yesterday that showed there is good growth in the country, especially in the manufacturing sector,” Myrto Sokou, an analyst at Sucden Financial Ltd. in London, said by phone today.

WTI for August delivery was at $98.31 a barrel, up 32 cents, in electronic trading on the New York Mercantile Exchange at 1:12 p.m. London time. The volume of all futures traded was 118 percent above the 100-day average. The contract climbed $1.43 to $97.99 yesterday, the highest close since June 19.

Brent for August settlement rose 25 cents to $103.25 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $4.94 to WTI. The spread settled at $5.01 yesterday, the narrowest closing gap since Jan. 4, 2011, after dropping below $5 in intraday trading.

Goldman’s Bet

Goldman Sachs Group Inc. has forecast since February 2012 that the Brent-WTI spread would shrink, even while the differential moved away from its prediction. The bank reiterated in May this year that it would narrow to $5 in the third quarter as new pipeline capacity is added to move oil out of the oil-storage hub at Cushing, Oklahoma. Cushing is the delivery point for WTI contracts traded in New York.

A supply hiccup at the U.K.’s biggest oil field, Buzzard, is now resolved, according to a person with knowledge of the matter who asked not to be identified because the information is confidential. The North Sea field returned to full production of about 204,000 barrels a day, after four days of reduced output, the person said. Buzzard is the largest contributor to the Forties crude grade, which typically sets the price of the Dated Brent benchmark. An official at Nexen Inc., the field’s operator, wasn’t immediately available to comment.

Gasoline Inventories

U.S. gasoline stockpiles probably rose by 600,000 barrels in the week ended June 28, according to the median estimate of 10 analysts surveyed by Bloomberg before tomorrow’s data from the Energy Information Administration. Distillate inventories, including heating oil and diesel, probably increased by 1 million barrels, the survey shows.

The industry-funded API, which collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines, is scheduled to publish its data at 4:30 p.m. in Washington today. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey to be released tomorrow at 10:30 a.m. U.S. Eastern time.

Manufacturing orders may have increased by 2 percent in May, up from a 1 percent rise in April, according to a Bloomberg survey. The data will be released today at 10 a.m. in New York.

Factory Production

U.S. factory output rebounded in June as orders picked up. The Institute for Supply Management’s manufacturing index climbed to a three-month high of 50.9 in June from 49 in May, the Tempe, Arizona-based group said yesterday. A reading of 50 is the dividing line between expansion and contraction.

The U.S. accounted for 21 percent of global oil demand last year, according to the International Energy Agency’s monthly oil market report published on June 12.

“It does seem to be a demand-side response from the market,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney who predicts traders may sell WTI contracts at about $98.50 a barrel. “We’re on alert for a shift to the downside move but given that this is demand-driven and there is potential for supply disruption, it’s not impossible this time to see oil go through the top of the range.”

Egypt’s army yesterday gave President Mohamed Mursi 48 hours to respond to the demands of protesters and end a political impasse. The armed forces said the deadline was a “last chance” for everyone and that it would impose its own plans for the future if demands weren’t met. Hours later, it downplayed talk of a military coup, saying it only wants to push for a quick resolution to the current crisis.

Brent’s advance may stall because of technical resistance, according to data compiled by Bloomberg. Futures have traded higher than the 50-day moving average the past three days without settling above it. This indicator is at about $103.25 a barrel today. Investors typically sell contracts when prices fail to breach chart-resistance levels.