WTI Rises for Third Day as Cushing Stockpiles Drop; Brent Gains

May 14, 2014 8:12 am ET

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May 14 (Bloomberg) -- West Texas Intermediate advanced for a third day, the longest rising streak in more than three weeks, after an industry report showed crude stockpiles fell at the biggest U.S. oil-storage hub. Brent gained as an ambush of Ukrainian government troops fanned tension with Russia.

Futures climbed as much as 0.5 percent in New York. Crude inventories at Cushing, the delivery point for WTI, shrank by 590,000 barrels last week, the American Petroleum Institute said yesterday. Supplies nationwide were probably unchanged at 397.6 million, near a record high, a Bloomberg News survey showed before Energy Information Administration data today. Ukraine is fighting an “undeclared war” with Russia, according to Acting Defense Minister Mykhaylo Koval.

“Prices have gained momentum from reports showing a draw- down in Cushing inventories,” Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London, said by e-mail. The declines are “taking Cushing stocks close to operational minimum levels.”

WTI for June delivery increased as much as 48 cents to $102.18 in electronic trading on the New York Mercantile Exchange and was at $102.05 at 12:58 p.m. London time. The contract gained $1.11 to $101.70 yesterday, the highest close since April 24. The volume of all futures traded was about 3 percent above the 100-day average for the time of day. Prices have advanced 3.7 percent this year.

Brent for June settlement, which expires tomorrow, climbed as much as 57 cents, or 0.5 percent, to $109.81 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.69 to WTI on ICE. The more- active July contract was up 39 cents at $108.93.

Oil Stockpiles

WTI rebounded last week after the EIA said crude inventories slid from 399.4 million barrels, the highest level since weekly reports were published in 1982. Supplies expanded by 912,000 barrels in the seven days ended May 9, according to the API, which collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines.

Gasoline stockpiles dropped by 2.02 million barrels last week, said the industry group in Washington. The EIA, the Energy Department’s statistical arm, may report an increase of 300,000 barrels, according to the median estimate in the Bloomberg survey of 11 analysts.

Crude inventories at Cushing probably declined for a 14th time in 15 weeks, a separate Bloomberg poll shows. Supplies have decreased to 24 million barrels since the southern portion of the Keystone XL pipeline began moving oil in January from the U.S. Midwest to the Gulf Coast.

Ukraine Crisis

“Falling Cushing stockpiles are having the biggest impact on rising crude prices at the moment,” Will Yun, a commodities analyst at Hyundai Futures Co. in Seoul, said by phone. “Tension in Ukraine is another factor that has been driving and supporting the upward streak in WTI prices.”

Ukraine urged Russia to condemn militants blamed for destabilizing the country as rebels killed seven soldiers during an ambush in a breakaway eastern region. The government in Moscow is supporting “protesters and terrorists,” Ukrainian Prime Minister Arseniy Yatsenyuk said in Brussels after talks with European Commission President Jose Barroso yesterday.

Ukraine “is as close to civil war as you can get” and a solution must be found that satisfies all regions, Russian Foreign Minister Sergei Lavrov said today. Russia has “no intention” of sending its troops anywhere, Lavrov said in an interview today with Bloomberg Television at the Foreign Ministry building in central Moscow.

Brent is extending gains after climbing above technical resistance, according to data compiled by Bloomberg. Futures settled higher than the 200-day moving average yesterday for the first time this month. Investors typically buy contracts when chart-resistance levels are breached.

The International Energy Agency, a Paris-based adviser on energy policy to developed nations, will release its monthly estimates of global oil demand and supply tomorrow at 10 a.m. local time.

--With assistance from Heesu Lee in Seoul and Ben Sharples in Melbourne.