WTI Set for Monthly Gain as Cushing Supplies Drop; Brent Steady

May 30, 2014 8:14 am ET

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May 30 (Bloomberg) -- West Texas Intermediate headed for its first monthly advance since February as crude inventories shrank at the delivery point for New York contracts. Brent was steady in London, poised for a second monthly gain amid violence in Ukraine.

Futures were little changed after rising 0.8 percent yesterday. Stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub, dropped by 1.53 million barrels last week to the lowest level since November 2008, according to the Energy Information Administration. Supplies nationwide expanded by 1.66 million, compared with a 500,000 barrel gain estimated in a Bloomberg News survey.

“WTI has been supported during the month of May by strong stock draws in Cushing and by short covering from large speculators,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by e-mail.

WTI for July delivery was at $103.04 a barrel in electronic trading on the New York Mercantile Exchange, down 54 cents, at 12:59 p.m. London time. The volume of all futures traded was about 36 percent below the 100-day average for the time of day. Prices are up 3.3 percent this month.

Brent for July settlement was 43 cents lower at $109.54 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.49 to WTI, compared with $8.33 at the end of April.

Crude Supplies

Stockpiles at Cushing fell to 21.7 million barrels, declining for the 16th time in 17 weeks, the EIA, the Energy Department’s statistical arm, said yesterday. Supplies have decreased since the southern leg of the Keystone XL pipeline began moving crude to Gulf Coast refineries in January.

“Cushing is certainly a factor” supporting front-month WTI prices, Tony Machacek, a broker at Jefferies Bache Ltd. in London, said by e-mail. Still, “total stocks are high, so there shouldn’t be any strong fundamental reason for prices to move too much higher.”

Total U.S. crude inventories rose to about 393 million barrels in the seven days ended May 23, the report shows. Supplies were at 399.4 million through April 25, the most since the EIA began publishing weekly data in 1982.

Gasoline stockpiles slid by 1.8 million barrels to 211.6 million, compared with a median forecast for no change in the Bloomberg survey of 11 analysts. Refinery utilization climbed for the first time in five weeks to 89.9 percent of capacity, according to the EIA.

WTI may fall next week amid speculation that crude supplies will be sufficient to meet demand, a separate Bloomberg survey shows. Nineteen of 36 analysts and traders, or 53 percent, said futures will decline through June 6 while 12 respondents predicted a price gain.

--With assistance from Ben Sharples in Melbourne.