WTI Crude Trades Near 14-Month High Before U.S. Inventory Data

West Texas Intermediate traded near its highest level in 14 months before data forecast to show U.S. crude supplies fell for a second week and as bloodshed in Egypt stoked concern that Middle Eastern exports may be disrupted.

Futures were little changed in New York, after closing at a 14-month high on July 5, as the relative strength index signaled prices may have advanced too quickly. Crude stockpiles probably dropped by 3.1 million barrels last week, according to a Bloomberg News survey before government data to be released tomorrow. Egypt’s army yesterday shot to death at least 51 supporters of deposed President Mohamed Mursi, the highest daily number of fatalities since his ouster.

“WTI is still underpinned by a positive U.S. macro-outlook,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “The U.S. benchmark has gained strongly the past week amid expectations of decent refining demand this summer. The situation in Egypt is very tense, keeping market participants on edge.”

WTI for August delivery was at $102.59 a barrel in electronic trading on the New York Mercantile Exchange, down 55 cents, at 1:59 p.m. London time. The volume of all futures traded was 10 percent above the 100-day average. The contract slipped 8 cents yesterday after closing at $103.22 on July 5, the highest since May 2, 2012. Prices increased 6.9 percent last week, the most since February 2011.

Chart Indicator

Brent for August settlement was down 16 cents at $107.27 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $4.62 to WTI contracts. The spread was $4.29 yesterday, the narrowest based on closing prices since January 2011.

WTI’s 14-day relative strength index closed above 70 for a second day yesterday, according to data compiled by Bloomberg. Investors typically sell contracts above that reading, when the market is considered overbought. The RSI is at about 72 today.

Egypt’s political upheaval continued to fan concern that strife in the most populous Arab country may spread. Interim President Adly Mansour set parliamentary elections within seven months in a 33-article constitutional declaration yesterday as he sought to push ahead with a political transition.

Suez Traffic

Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which a combined 2.24 million barrels a day of oil were shipped from the Red Sea to Europe and North America in 2011, U.S. Energy Information Administration data show. Egypt also borders Libya, which holds Africa’s largest proven crude reserves and is itself experiencing political unrest and sporadic strikes at oil ports.

The Middle East accounted for 35 percent of global crude output in the first quarter of this year, according to the International Energy Agency in Paris.

BP Plc, BG Group Plc and Eni SpA have pulled out “non-essential” staff from Egypt, while Royal Dutch Shell Plc temporarily relocated some workers and dependents, said officials at the European companies.

“Egypt is still spooking the market,” said David Lennox, a resource analyst at Fat Prophets in Sydney. The most recent reported U.S. crude stockpile decline “was quite substantial, and a further draw-down of that magnitude might certainly give the market good reason to stay well over $100.”

Gasoline Stockpiles

U.S. gasoline inventories are forecast to have climbed by 1 million barrels in the week ended July 5, according to the median estimate of 10 analysts surveyed by Bloomberg. The EIA, the Energy Department’s statistical unit, is scheduled to release its weekly supply report tomorrow.

Refinery operating rates probably gained by 0.25 percentage points, the survey shows. Processing rose to an average 92.2 percent of capacity in the previous week, the highest rate since August. Refiners typically boost output this time of year to meet increased motor fuel demand during the U.S. summer driving season, which runs from late May to early September.

Distillate inventories, including heating oil and diesel, are projected to have risen by 1 million barrels last week.

The American Petroleum Institute will release its own supply data in Washington today. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.

Hedge funds increased bullish bets on WTI for the third time in four weeks, according to the U.S. Commodity Futures Trading Commission. Money managers boosted net-long positions by 14 percent to 263,643 futures and options combined in the week to July 2, its Commitments of Traders report showed yesterday. The total was the most since February 2012.

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