(For Bloomberg fair value curves, see CFVL <GO>.)
Feb. 11 (Bloomberg) -- West Texas Intermediate oil rose to a six-week high after the close of floor trading on an industry report that showed inventories at Cushing, Oklahoma, the delivery point for the contract, tumbled last week.
Futures gained as much as 0.5 percent after the American Petroleum Institute said Cushing supplies fell 2.49 million barrels. Prices settled lower on speculation that the Energy Information Administration will report tomorrow that nationwide crude stockpiles gained in the seven days ended Feb. 7. WTI has traded at a discount to Brent oil in London because of surging U.S. output and a lack of transportation to the Gulf Coast.
“This is a very large decline, the largest I can remember,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It looks like the completion of pipelines is ending the bottleneck at Cushing. This suggests that the days of a big WTI-Brent spread are coming to an end.”
WTI for March delivery rose as much as 54 cents to $100.60 a barrel on the New York Mercantile Exchange after the release of the API report at 4:30 p.m. in Washington. Futures fell 12 cents to settle at $99.94. The volume of all futures traded was 4.8 percent above the 100-day average at 5:14 p.m.
Brent crude for March settlement rose 5 cents to end the session at $108.68 a barrel on the London-based ICE Futures Europe exchange. Trading was 20 percent above the 100-day average. The European benchmark grade closed at a $8.74 premium to WTI.
The EIA report tomorrow will probably show that crude inventories rose by 2.6 million barrels in the week ended Feb. 7, according to the median estimate of 10 analysts surveyed by Bloomberg. U.S. crude stockpiles climbed to 358.1 million barrels in the week ended Jan. 31, the highest level since December, EIA data showed on Feb. 5. They’re above the seasonal average for the past 10 years.
“We should get crude builds for the next couple of weeks as refineries perform seasonal maintenance,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “Crude demand will be depressed until the refineries come out of turnarounds and increase gasoline output.”
Refineries reduced their operating rates by 0.5 percentage point to 85.6 percent of capacity last week, the lowest level since April, the Bloomberg survey showed. Refiners often idle units at the start of the year after preparing for the heating season in November and December. Operating rates increase in spring as the peak-demand gasoline season approaches.
“I’m looking for a slight increase in crude supplies because refinery runs probably fell last week,” said Tom Finlon, the Jupiter, Florida-based director of Energy Analytics Group LLC.
Supplies of distillate fuel, a category that includes heating oil and diesel, fell by 2.13 million barrels to 111.7 million last week, the Bloomberg survey showed. Stockpiles dropped by 2.36 million to 113.8 million in the seven days through Jan. 31, the lowest seasonal level since 2003, EIA data show.
“Another crude build would be bearish,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Recent crude builds have been offset by the big declines in distillate. We’ll be keeping an eye on the distillate number.”
The EIA report is projected to show that gasoline stockpiles increased 100,000 barrels in the seven days ended Feb. 7, according to the survey.
Ultra low sulfur diesel for March delivery climbed 3 cents, or 1 percent, to close at $3.0281 a gallon on the Nymex. Volume was 20 percent above the 100-day average. Gasoline for March delivery rose 2.78 cents, or 1 percent, to $2.7526 a gallon, the highest settlement since Dec. 31.
A winter storm may spread snow and sleet across the country’s southern tier, the U.S. National Weather Service said. Arctic weather that boosted energy demand has helped WTI rise for four weeks in a row, the longest streak of gains since July.
Implied volatility for at-the-money WTI options expiring in April was 17.5 percent, down from 17.6 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 500,643 contracts at 5:14 p.m. It totaled 612,841 contracts yesterday, 21 percent above the three-month average. Open interest was 1.63 million contracts, the most since Dec. 16.
--With assistance from Grant Smith in London. Editors: Margot Habiby, Dan Stets