WTI Crude Advances as Cushing Stockpiles Drop to Five-Year Low

Jun 11, 2014 10:42 am ET

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June 11 (Bloomberg) -- West Texas Intermediate crude advanced after the Energy Information Administration said inventories at Cushing, Oklahoma, declined to a five-year low.

WTI traded in a 54-cent range as stockpiles at the delivery point for WTI futures dropped 198,000 barrels in the week ended June 6, the EIA said. Total stockpiles fell 2.6 million to 386.9 million, exceeding the 2 million decline predicted in a Bloomberg survey of analysts. Brent gained on concern Middle East tension may disrupt supplies.

WTI for July delivery rose 19 cents to $104.54 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Volume was 17 percent below the 100-day average for the time of day.

Brent for July settlement gained 34 cents to $109.86 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures was 34 percent above the 100-day average. The European benchmark crude traded at a premium of $5.32 to WTI. The spread narrowed for a third day yesterday to close at $5.17.

Refineries operated at 87.9 percent of their capacity, down from 90.8 percent the previous week.

Cushing inventories decreased to 21.2 million, the least since November 2008. The southern leg of the Keystone XL pipeline began moving oil to Gulf refineries from the hub in January.

Brent climbed as OPEC left its production target unchanged and as fighters from a breakaway al-Qaeda group are in position to seize Iraqi energy infrastructure after taking control of Mosul.

The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, kept its production target unchanged at 30 million barrels a day, a decision that was widely anticipated.

The fighting in the northern Iraqi city forced a halt in repairs to a main pipeline from Kirkuk to the Mediterranean port of Ceyhan, Turkey, the state-run North Oil Co. said in a statement yesterday. Shipments through the line, a frequent target of sabotage, have stopped since March 2, leaving Iraq with a single outlet, by tanker via the Persian Gulf, for its most lucrative export.

Iraq produced 3.3 million barrels of oil a day in May, data compiled by Bloomberg show. An estimated 17 percent of the country’s oil reserves lie in the north, including the Kirkuk oil field, according to the U.S. Energy Information Administration.