WTI Gains to One-Week High as U.S. Supplies Drop

West Texas Intermediate rose to the highest level in a week as crude inventories shrank in the U.S., the world’s biggest consumer. Brent’s premium to WTI shrank to the narrowest in five months.

Futures gained as much as 0.8 percent in New York after rising 1.4 percent yesterday. Crude supplies dropped by 4.27 million barrels to 358 million last week, Energy Information Administration data showed. A gain of 750,000 barrels was forecast in a Bloomberg News survey. U.S. and Arab warplanes struck small refineries in eastern Syria controlled by Islamic State extremists, according to the U.S. Defense Department.

“U.S. crude futures found plenty of support in the latest round of EIA data,” David Wech, an analyst at JBC Energy GmbH in Vienna, said in a report. The decline in crude stockpiles was driven by lower imports and higher refinery processing rates, he said.

WTI for November delivery added as much as 74 cents to $93.54 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Sept. 18. Futures were at $93.40 as of 1:32 p.m. London time. The volume of all futures traded was about 5 percent above the 100-day average for the time of day. Prices have slid 5.1 percent this year.

Brent for November settlement was 43 cents higher at $97.38 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude’s premium to WTI dropped to as little as $3.93 a barrel, the narrowest since April 14.

Fuel Supplies

U.S. gasoline inventories fell by 414,000 barrels to 210.3 million in the week ended Sept. 19, said the EIA, the Energy Department’s statistical arm. Supplies were to be unchanged, according to the median estimate in the Bloomberg survey of 11 analysts.

“Declining crude stockpiles in the U.S. are what’s supporting oil prices today,” Hong Sung Ki, an analyst at Samsung Futures Inc. in Seoul, said by phone. “I don’t see other factors that would drive crude prices down even further.”

Distillate stockpiles, including heating oil and diesel, expanded by 823,000 barrels to 128.6 million, the EIA data show. That marked a fifth weekly gain.

Thirteen strikes with manned aircraft and drones by the U.S., Saudi Arabia and the United Arab Emirates hit 12 “modular” refineries used by Islamic State in its oil-smuggling operations, U.S. Central Command said in a statement yesterday.

Oil Revenue

Islamic State may be raising more than $2 million a day in revenue from oil sales in Iraq and Syria, paid either in cash or bartered goods, according to Luay al-Khatteeb, a visiting fellow at the Brookings Institution’s Doha Center in Qatar. The group controls seven oil fields and two refineries in northern Iraq, and six out of 10 oil fields in eastern Syria, he said.

Plentiful oil supplies are keeping prices down even as the U.S. campaign extends into Syria. WTI has decreased 12 percent since the end of June while Brent has lost 14 percent, each poised for the largest three-month decline in nine quarters.

In Libya, output climbed to 900,000 barrels a day as the Sharara field boosted production, Mohamed Elharari, a spokesman at National Oil Corp., said yesterday. The member of the Organization of Petroleum Exporting Countries is seeking to sustain a supply recovery after a year of unrest.

Iraqi oil exports will increase this month to 2.5 million barrels a day, up 5.5 percent from August, because of better stability of shipments from southern terminals, Abdul Ilah Qassim, an adviser to the government’s Council of Ministers, said by phone yesterday.

Before it's here, it's on the Bloomberg Terminal.