WTI Crude Snaps Four-Day Loss on Forecast U.S. Stockpile Drop

West Texas Intermediate rebounded from four days of losses before U.S. data that’s forecast to show stockpiles dropped in the world’s largest oil consumer.

Futures rose as much as 0.6 percent before a government report today that may show crude inventories slid 1 million barrels to an 18-month low last week. The industry-funded American Petroleum Institute said supplies fell 54,000 barrels. WTI dropped to the lowest close in eight weeks yesterday on speculation that U.S.-Iranian relations are thawing and as the threat of an American military strike on Syria receded.

“U.S. inventory figures will be one of the highlights today, especially as we’re moving out of driving season,” said Thina Saltvedt, an analyst at Nordea Bank AG in Oslo. “We’ll see how close WTI and Brent get, as things are calming down in Libya with production coming back. Iran is back to negotiating, but there are still some doubts there.”

WTI crude for November delivery advanced as much as 61 cents to $103.74 a barrel on the New York Mercantile Exchange and was at $103.32 as of 9:51 a.m. in London. Futures slid 4.6 percent over the previous four sessions. The volume of all futures traded was 6 percent below the 100-day average. Prices are up 6.9 percent this quarter and 12.4 percent higher in 2013.

Supply Forecast

Brent for November settlement gained 67 cents, or 0.6 percent, to $109.31 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $6.03 to WTI. The spread was at $5.51 yesterday, the widest since Sept. 6.

U.S. crude inventories fell 0.3 percent to 354.6 million barrels as of Sept. 20, according to the median of 10 analyst estimates surveyed before the Energy Information Administration report. Supplies probably dropped as refineries operated at more than 90 percent of capacity and oil imports slipped.

The EIA, the U.S. Energy Department’s statistical arm, is scheduled to release its inventory report at 10:30 a.m. today in Washington. The data will show stockpiles of gasoline slid 750,000 barrels and middle distillates, a category that includes heating oil and diesel, lost 925,000 barrels last week, according to the Bloomberg survey.

API Report

The API’s weekly report yesterday showed distillate inventories rose 485,000 while gasoline stockpiles increased 341,000 barrels. API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.

Supplies slipped in 10 of the past 12 EIA reports as refineries operated near the highest rates of the year. Plants have slowed fuel output in the third quarter of each year since 1999 as they implemented maintenance programs. Crude imports decreased during September in four of the past five years.

Refineries probably ran at 91.6 percent of capacity on Sept. 20, down 0.9 percentage point from a week earlier, the survey showed. Units are often idled in September and October for maintenance as attention shifts away from gasoline and before heating-oil demand peaks.

Oil rose to a two-year high on Aug. 28 amid concern that a U.S.-led assault would widen the Syrian conflict and disrupt Middle East shipments.

The United Nations Security Council is set to negotiate a Syria resolution. The U.S., the U.K. and France have accused government forces of carrying out a chemical attack on Aug. 21 that killed 1,400 people near Damascus. Syrian President Bashar al-Assad has blamed rebel groups.

Separately, U.S. President Barack Obama welcomed overtures from Iran as a chance to resolve diplomatically the confrontation over the Persian Gulf nation’s nuclear program, even as Iranian officials told the U.S. that the time isn’t right for direct contact between the two countries’ leaders.

Deutsche Bank AG increased its forecasts for WTI and Brent crudes this year after prices rose in the third quarter. The bank raised its outlook for WTI by 5 percent to $99.88 barrel and Brent by 1.8 percent to $109, report e-mailed today showed.

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