WTI Climbs on Cushing Crude Supply Drop; Brent Gains on Ukraine

May 29, 2014 11:08 am ET

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May 29 (Bloomberg) -- West Texas Intermediate crude rose after stockpiles at Cushing, Oklahoma, delivery point for the contract, dropped for the 16th time in 17 weeks. Brent gained after rebels downed a military helicopter in eastern Ukraine.

Supplies at Cushing fell 1.53 million barrels to 21.7 million last week, the lowest level since November 2008, an Energy Information Administration report showed. Nationwide stockpiles rose 1.66 million barrels to 393 million. Brent has climbed this month on concern that violence in Ukraine might lead to a disruption of shipments of oil and gas from Russia.

WTI for July delivery increased 51 cents, or 0.5 percent, to $103.23 a barrel at 11:06 a.m. on the New York Mercantile Exchange. Futures traded at $103.06 before the release of the report at 11 a.m. in Washington. The volume of all futures traded was 41 percent below the 100-day average.

Brent for July settlement climbed 55 cents, or 0.5 percent, to $110.36 a barrel on the London-based ICE Futures Europe exchange. Volume was 15 percent lower than the 100-day average.

The EIA weekly supply report was delayed for a day because on the U.S. Memorial Day holiday on May 26.

Cushing inventories have tumbled by almost 20 million barrels since the southern leg of the Keystone XL pipeline began moving crude to Gulf Coast refineries in January.

Nationwide supplies climbed to 393 million in the seven days ended May 23, according to the EIA, the Energy Department’s statistical arm. Analysts surveyed by Bloomberg projected a 500,000-barrel gain. Stockpiles rose to 399.4 million barrels in the week ended April 25, the most since the agency began publishing weekly data in 1982.

U.S. crude production gained 38,000 barrels a day to 8.47 million. Output has surged this year as a combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations, including the Bakken in North Dakota and the Eagle Ford in Texas.

Refineries operated at 89.9 percent of capacity last week, up 1.2 percentage points from the prior week.

Gasoline stockpiles declined 1.8 million barrels to 211.6 million. Analysts surveyed by Bloomberg were split over whether supplies of the fuel dropped or climbed last week.

Brent is poised for a second monthly gain amid separatist violence in Ukraine that erupted after Russia annexed the Black Sea peninsula of Crimea in March. Ukraine is a conduit for Russian oil and natural gas supplies to Europe.

“It’s necessary to take emergency steps to stop the bloodshed and start an inclusive internal Ukrainian dialog,” Russia’s Foreign Minister Sergei Lavrov told his German counterpart Frank-Walter Steinmeier by phone yesterday, according to the ministry’s website.