WTI Crude Advances as Cushing Inventories DeclineMoming Zhou
West Texas Intermediate crude gained as inventories at Cushing, Oklahoma, decreased for an eighth week and demand for gasoline reached a three-month high. Brent rose for the fourth time in five days.
WTI climbed 1.1 percent, ending above $100 for the first time in a week. Stocks at the WTI delivery point slid 1.33 million barrels in the week ended March 21, the Energy Information Administration said. Gasoline demand exceeded 9 million barrels a day for the first time this year. WTI also rose as a Commerce Department report showed vehicle demand lifted February durable-goods orders.
“We are still seeing the decline in Cushing stocks,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “One thing that jumps out from the EIA report is the strong gasoline demand. People are more bullish about the economy and oil demand now.”
WTI for May delivery gained $1.07 to settle at $100.26 a barrel on the New York Mercantile Exchange. The volume was 16 percent below the 100-day average for the time of day.
Brent for May settlement rose 4 cents to $107.03 a barrel, a one-week high, on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.77 to WTI, down from yesterday’s $7.80.
Cushing stockpiles decreased to 28.5 million barrels, a two-year low, the Energy Department’s statistical unit said. Supplies at the hub dropped starting in January after the southern link of TransCanada Corp.’s Keystone XL pipeline to the Texas Gulf Coast from Cushing opened, easing a bottleneck.
“Cushing inventories are decreasing as you have that pipeline running,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston.
Stockpiles along the Gulf of Mexico, known as PADD 3, rose 6.06 million barrels to 200.3 million, the most in EIA data begun in 1990 and the 10th straight gain. The pipelines from Cushing to Houston move oil to PADD 3 from PADD 2.
“You wind up with a glut at the Gulf Coast,” Lynch said.
Gasoline consumption rose 5.8 percent last week to 9.002 million barrels a day, the highest level since Dec. 20. Total U.S. crude stockpiles increased 6.62 million barrels to 382.5 million, the most since November.
“The jump in crude stocks is certainly very big,” said Gordy Elliott, a risk-management specialist at Intl FC Stone LLC in St. Louis Park, Minnesota. “We are dancing around $100.”
WTI also gained as the Commerce Department reported that orders for motor vehicles and parts advanced 3.6 percent in February. Demand for all durable goods, items meant to last at least three years, increased a more-than-forecast 2.2 percent.
“Durable goods and vehicle demand are pretty strong, giving us optimism for a stronger economy and higher oil consumption,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
The Houston Ship Channel, home to the nation’s largest petrochemical complex and export port, reopened to all lanes of traffic today for the first time since a March 22 oil spill, according to the U.S. Coast Guard.
“Houston Ship Channel coming back online may ease supply concern,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
Implied volatility for at-the-money WTI options expiring in May was 17.4 percent, down from 17.5 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 383,149 contracts at 2:52 p.m. It totaled 403,525 contracts yesterday, 22 percent below the three-month average. Open interest was 1.6 million contracts.