WTI Crude Trades Near Six-Week High on Cushing; Brent Tops $110

Apr 16, 2014 10:44 am ET

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April 16 (Bloomberg) -- West Texas Intermediate traded near a six-week high after stockpiles at Cushing, Oklahoma, the delivery point for the contract, dropped. Brent climbed above $110 a barrel on signs that the crisis in Ukraine is escalating.

Futures increased as much as 1.2 percent in New York. Cushing supplies slid 771,000 barrels last week to 26.8 million, the lowest level since October 2009, according to the Energy Information Administration. Nationwide inventories grew more than five times as much as forecast. Ukraine began an offensive against separatists in its east, recapturing an airport amid claims that Russian special forces were fomenting unrest.

WTI for May delivery advanced 54 cents, or 0.5 percent, to $104.29 a barrel at 10:38 a.m. on the New York Mercantile Exchange. The contract traded at $104.54 before the release of the report at 10:30 a.m. in Washington. Futures jumped to $104.99 earlier, the highest level since March 3. The volume of all futures traded was 19 percent above the 100-day average.

Brent for June settlement rose 59 cents, or 0.5 percent, to $109.95 a barrel on the London-based ICE Futures Europe exchange. Prices climbed above $110 for the first time since March 4. The May contract expired yesterday. Volume was 12 percent above the 100-day average.

WTI’s discount to Brent for the same month widened to $6.43 a barrel.

Inventories at Cushing have fallen since the southern portion of the Keystone XL pipeline began moving oil to the Texas Gulf Coast from the hub in January.

Surging Output

Nationwide crude supplies grew 10 million barrels to 394.1 million last week, the EIA, the Energy Department’s statistical arm, reported. Stockpiles were projected to gain 1.75 million barrels, according to the median of 10 analyst responses in a Bloomberg survey.

U.S. crude production increased 72,000 barrels a day to 8.3 million, the highest level since April 1988, the EIA said. Output has surged this year as a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies trapped in shale formations.

Refineries operated at 88.8 percent of capacity in the seven days ended April 11, up 1.3 percentage points from the prior week and the highest level since Jan. 10, the EIA said.

Fuel Stockpiles

Supplies of distillate fuel, a category that includes heating oil and diesel, fell 1.28 million barrels last week to 111.9 million, the report showed. Gasoline stockpiles dropped 154,000 barrels to 210.3 million.

Ukraine’s offensive yesterday marked its first foray against armed activists holding government buildings in cities near the Russian border. Interior Ministry units ousted pro- Russian activists who had seized the airfield in Kramatorsk. Efforts to contain the insurgency risk escalating tensions with the government in Moscow, which warned of a potential civil war.

Russia has 40,000 troops massed on Ukraine’s border after its annexation of Crimea last month, the North Atlantic Treaty Organization said.

Top energy, oil stories: ETOP <GO> and OTOP <GO> News on oil inventories: TNI OIL INV <GO> News on oil markets: NI OILMARKET <GO> News on OPEC: NI OPEC <GO> Oil markets menu: OIL <GO> To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Margot Habiby, Richard Stubbe