May 7 (Bloomberg) -- West Texas Intermediate rose after a government report showed that U.S. crude inventories dropped. WTI’s discount to Brent, the European benchmark oil, shrank.
Nationwide stockpiles slipped 1.78 million barrels in the week ended May, 2, the U.S. Energy Information Administration said. Supplies were projected to rise 1.25 million, according to the median estimate of 10 analysts surveyed by Bloomberg. Stockpiles at Cushing, Oklahoma, the delivery point for WTI, fell 1.4 million barrels.
“WTI is rising relative to Brent because of the drop in U.S. supplies,” Michael Lynch, the president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone.
WTI for June delivery increased 84 cents, or 0.8 percent, to $100.34 a barrel at 10:35 a.m. on the New York Mercantile Exchange. The contract traded at $100.13 before the release of the report at 10:30 a.m. in Washington. The volume of all futures traded was 5 percent below the 100-day average.
Brent for June settlement rose 29 cents, or 0.3 percent, to $107.35 a barrel on the London-based ICE Futures Europe exchange. Volume was 45 percent higher than the 100-day average.
The European benchmark crude traded at a $7.01 premium to WTI. The spread narrowed to $7.56 at yesterday’s close, the least since April 28.
The decrease left U.S. stockpiles at 397.6 million barrels, according to the EIA, the Energy Department’s statistical arm. Cushing stockpiles slipped to 24 million, lowest since November 2008.
U.S. crude production declined 2,000 barrels a day to 8.35 million, 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 90.2 percent of capacity in the seven days ended May 2, down 0.8 percentage point from the prior week.
Supplies of distillate fuel, a category that includes heating oil and diesel, fell 447,000 barrels last week to 114 million, the report showed. Gasoline stockpiles increased 1.61 million to 213.2 million.
Russia called on Ukraine to postpone a May 25 presidential election as the government in Kiev continued a military offensive against separatists in its east and south. The U.S., which has accused Russia of fomenting unrest, is discussing a third round of penalties with European Union officials that may target Russia’s financial, energy or mining industries.