WTI Oil Erases Gains After Crude Stockpiles Advance at Cushing

Jun 18, 2014 10:42 am ET

June 18 (Bloomberg) -- West Texas Intermediate crude erased gains after a government report showed that U.S. supplies rose at Cushing, Oklahoma. Brent traded above $113 as Islamist militants fought Iraq’s government for control of the nation’s largest refinery.

Crude stockpiles rose 247,000 barrels to 21.4 million last week at Cushing, the delivery point for New York Mercantile Exchange futures, Energy Information Administration data showed. Total stockpiles fell 579,000 barrels, less than the 750,000- barrel inventory drop was projected by analysts surveyed by Bloomberg. The Baiji refinery in northern Iraq was damaged as a battle raged over control of the plant.

WTI for July delivery fell 19 cents to $106.17 a barrel at 10:37 a.m. on the New York Mercantile Exchange. Futures traded at $106.63 before the release of the report at 10:30 a.m. in Washington. The contract touched $107.68 on June 13, the highest level since Sept. 19. The volume of all futures traded was 24 percent above the 100-day average.

Brent for August settlement increased 1 cent to $113.46 a barrel on the London-based ICE Futures Europe exchange. Volumes were little changed from the 100-day average. The European benchmark crude was trading at a $7.74 premium to the August WTI contract versus $7.58 yesterday.

U.S. crude stockpiles rose to 399.4 million barrels in the week ended April 25, the most since the EIA began publishing weekly data in 1982.

Crude Output

U.S. crude production increased 17,000 barrels a day to 8.477 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 87.1 percent of capacity last week, down 0.8 percentage points from the prior week.

Gasoline stockpiles increased 785,000 barrels to 214.3 million. A 550,000-barrel decline was projected, according to the median of eight analyst responses in the Bloomberg survey.

Elite Iraqi forces were defending Baiji, a military spokesman said today. The comments contradicted local police who said militants had captured the refinery. A fuel tank at the facility caught fire after shelling by militants, according to the Salahuddin provincial police command. The refinery halted operations yesterday because its storage tanks were full, according to Iraq’s Oil Ministry.

Military Options

The U.S. is conducting aerial drone operations over northern Iraq at the government’s request, Treasury Secretary Jacob J. Lew said in Jerusalem today. President Barack Obama is still deciding on whether to use military options, National Security Council spokeswoman Bernadette Meehan said yesterday.

Kurdish troops have taken control of the Kirkuk oil field, Iraq’s fourth-largest, after the military abandoned the area last week. The fighting hasn’t spread to the south, which the EIA estimates is home to three-quarters of Iraqi output.

Exports of Basrah Light crude, the country’s main grade, may reach about 2.8 million barrels a day next month, according to a preliminary loading plan obtained by Bloomberg on June 16. That’s 11 percent more than this year’s average and would be close to matching a three-decade high in February.