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May 23 (Bloomberg) -- West Texas Intermediate oil climbed to a five-week high after U.S. crude inventories tumbled. Brent approached $111 a barrel.
Futures capped a third weekly gain in New York. U.S. crude supplies dropped 7.23 million barrels in the seven days ended May 16, the Energy Information Administration said May 21. Stockpiles at Cushing, Oklahoma, the delivery point for WTI, fell to 23.4 million barrels last week, the least since December 2008. Prices also advanced as violence flared ahead of Ukraine’s May 25 presidential election and unrest continued in Libya.
“This has been a pretty solid week for WTI,” Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London, said by phone. “Prices are up because of the drop of inventories. Cushing supplies are getting close to minimum operating levels.”
WTI for July delivery increased 61 cents, or 0.6 percent, to settle $104.35 a barrel on the New York Mercantile Exchange. It’s the highest close since April 21. Prices rose 2.3 percent this week and 6 percent this year. The volume of all futures traded was 35 percent below the 100-day average at 3:46 p.m.
There will be no floor trading in New York on May 26 because of the Memorial Day holiday.
Brent for July settlement gained 18 cents to end the session at $110.54 a barrel on the London-based ICE Futures Europe exchange. Volume was 28 percent lower than the 100-day average. The European benchmark closed at a $6.19 premium to WTI, the least since April 21.
U.S. crude inventories dropped to 391.3 million barrels in the seven days ended May 16, the lowest level in six weeks, according to the EIA. Stockpiles rose to 399.4 million through April 25, the most since the Energy Department’s statistical arm began publishing weekly data in 1982.
Cushing supplies have tumbled 44 percent since Jan. 24, EIA data show, as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from the hub. Adam Longson, a Morgan Stanley analyst in New York, said in an e-mailed note on May 5 that they may reach a floor of 20 million barrels before the end of the month.
Inventories along the Gulf Coast, known as PADD 3, fell 5.71 million barrels last week to 210 million, the EIA said. Supplies climbed to 215.7 million in the week ended May 9, the most in data going back to 1990.
“The drop in Gulf Coast supplies was a major catalyst,” Sen said. “Earlier, when Cushing was drawing, Gulf Coast stocks were at a record and expectations were for crude to back up to Cushing. This time USGC drew too.”
An attack yesterday by pro-Russian rebels in Ukraine left 16 servicemen dead, the highest death toll for government forces since the separatist conflict in the eastern part of the country began in March. WTI climbed to a five-month high of $105.22 during trading on March 3 as Russia seized control of the Ukraine’s Black Sea region of Crimea.
The government in Kiev accused Russia of seeking to destabilize the country before the ballot. Ukrainian Prime Minister Arseniy Yatsenyuk called for a United Nations Security Council session on the situation. The North Atlantic Treaty Organization has estimated the number of Russian troops on the frontier at 40,000.
Libyan National Oil Corp. Chairman Nuri Berruien resigned, the company said. The North African country pumped 215,000 barrels a day in April, down 84 percent from a year earlier, according to data compiled by Bloomberg.
“Geopolitics appears to be the principal driver,” Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said by phone. “There’s a lot of wariness surrounding this weekend’s presidential election in Ukraine and concern about Libya.”
--With assistance from Grant Smith in London.