(For Bloomberg fair value curves, see CFVL <GO>.)
April 8 (Bloomberg) -- West Texas Intermediate crude rose to a one-month high on speculation that inventories at Cushing, Oklahoma, the delivery point for the contract, dropped for a 10th week. Brent gained.
Futures climbed 2.1 percent in New York. Cushing stockpiles slid 35 percent to 27.3 million barrels in the nine weeks to March 28, Energy Information Administration data show. The EIA may say tomorrow that supplies at the hub fell last week, according to a Bloomberg survey. The rally accelerated as the dollar slumped against its peers, bolstering the appeal of commodities to investors.
“The market is moving higher on expectations that inventories fell yet again at Cushing,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The market is moving on this local supply issue, which shouldn’t be a surprise at this point.”
WTI for May delivery climbed $2.12 to $102.56 a barrel on the New York Mercantile Exchange. It was the highest settlement since March 7 and the biggest gain since March 3. Prices are up 4.2 percent this year. The volume of all futures traded was 52 percent above the 100-day average at 4:36 p.m.
Prices slipped from the settlement after the American Petroleum Institute reported U.S. crude inventories rose 7.08 million barrels last week. WTI futures fell $1.99, or 1.9 percent, to $102.34 at 4:36 p.m. in electronic trading. Prices were $102.51 before the report was released at 4:30 p.m.
Brent for May settlement advanced $1.85, or 1.7 percent, to $107.67 a barrel on the ICE Futures Europe exchange in London. It was the highest close since March 31. Volume was 35 percent more than the 100-day average. The European benchmark closed at a $5.11 premium to WTI, the narrowest since Oct. 2.
Cushing stockpiles have fallen since the southern portion of the Keystone XL pipeline began moving oil in January to the Texas Gulf Coast from Cushing.
Tomorrow’s report from the EIA, the Energy Department’s statistical arm, will probably show that total U.S. crude supplies rose 750,000 barrels last week, according to the median of 10 analyst responses in the Bloomberg survey.
The dollar dropped as the threat of more stimulus from the European Central Bank dissipated and U.K. industrial output exceeded forecasts. The Standard & Poor’s GSCI Index, a gauge of 24 raw materials, increased as much as 1.4 percent, led by gains in WTI, gasoline and Brent.
Oil also rose U.S. Secretary of State John Kerry said it would take Iran two months to produce material for one nuclear weapon. Iranian crude production increased 65,000 barrels a day to 2.865 million in March, the highest level since July 2012, when additional sanctions were imposed on the Islamic republic, according to a Bloomberg survey.
“I think it’s public knowledge today that we’re operating with a time period for a so-called breakout of about two months,” Kerry said at a Senate Foreign Relations Committee hearing today.
Kerry spoke as diplomats searching for a long-term accord over Iran’s nuclear program began two days of talks in Vienna. European Union foreign policy chief Catherine Ashton and Iranian Foreign Minister Mohammad Javad Zarif convened envoys from China, France, Germany, Russia, the U.K. and U.S. The sides are seeking a permanent deal by July 20.
“The Kerry comments are a reminder that there are still major issues between Iran and the West,” said Tom Finlon, the Jupiter, Florida-based director of Energy Analytics Group LLC. “If the talks were to fail, prices would surge higher.”
Futures also climbed on tension between the West and Russia, the world’s biggest energy exporter, over Ukraine. Russia called on Ukraine to halt all military preparations in the east “immediately” or risk civil war.
WTI dropped 0.7 percent yesterday on speculation Libyan crude exports will gain after an agreement between the government and rebels. The holder of Africa’s largest oil reserves has become the smallest producer in the Organization of Petroleum Exporting Countries as unrest has cut production. Output shrank to 250,000 barrels a day in March, down from 1.4 million a year earlier, a Bloomberg survey shows.
“Yesterday, we sold off on optimism about Libya and today doubts about their ability to get their act together are seeping in,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Implied volatility for at-the-money WTI options expiring in May was 18.2 percent, down from 18.4 yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 682,336 contracts at 4:37 p.m. It totaled 585,779 contracts yesterday, 9.9 percent above the three-month average. Open interest was 1.65 million contracts.
--With assistance from Grant Smith in London.