WTI Rises for Second Day Before Stockpiles Data; Brent Gains

Jul 22, 2014 7:52 am ET

(For Bloomberg fair value curves, see CFVL <GO>)

July 22 (Bloomberg) -- West Texas Intermediate rose for a second day before stockpile data that will signal the strength of fuel demand in the U.S., the world’s biggest oil consumer. Brent gained in London.

Futures climbed as much as 0.6 percent in New York. U.S. crude inventories probably shrank by 2.8 million barrels last week, according to a Bloomberg News survey before tomorrow’s Energy Information Administration report. The United Nations Security Council voted unanimously to approve a resolution calling for an international probe into the downing of a Malaysian Air passenger jet in Ukraine. U.S. Secretary of State John Kerry is holding talks in Cairo to end fighting in the Gaza Strip.

“Inventories are something that can influence prices as in the past weeks there were large draws which were bullish,” Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, said by phone today. “The biggest issues supporting prices are the crises in Ukraine and Gaza.”

WTI for August delivery, which expires today, gained as much as 66 cents to $105.25 a barrel in electronic trading on the New York Mercantile Exchange. The contract closed at $104.59 yesterday, the highest level since July 1. September crude was up 21 cents at $103.07 at 12:28 p.m. London time. The volume of all futures traded was about 31 percent above the 100-day average. Front-month prices have advanced 6.6 percent this year.

Fuel Supplies

Brent for September settlement gained 53 cents, to $108.21 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade traded at a premium of $5.10 to WTI on ICE for the same month.

U.S. crude inventories probably fell to 372.2 million barrels in the week ended July 18, according to the median estimate in the Bloomberg survey of seven analysts. That would be a fourth weekly decline, bringing supplies to the lowest level since early March.

Gasoline stockpiles are projected to have increased by 1 million barrels, the survey shows. Distillates, including heating oil and diesel, probably expanded by 2 million. The industry-funded American Petroleum Institute in Washington is scheduled to release separate supply data today.

The U.S. driving season typically starts on Memorial Day, which came on May 26 this year, and runs through Labor Day on Sept. 1.

Malaysian Jet

Brent rebounded last week for the first weekly gain in a month after Flight 17 was shot down over rebel-held territory in eastern Ukraine, killing all 298 passengers and crew. The incident threatened to intensify the worst crisis between the West and Russia since the end of the Cold War.

As European foreign ministers head to Brussels for a meeting today to discuss further sanctions, France raised the possibility that it may drop plans to sell the second of two helicopter carriers to Russia. In Washington, U.S. President Barack Obama urged President Vladimir Putin to rein in the Ukrainian separatists, who he said were “Russia-backed.”

The plane crash on July 17 came hours after the U.S. and European Union imposed a new round of sanctions on Russian banks and energy and defense firms to punish the government in Moscow over its annexation of Crimea in March. OAO Rosneft, Russia’s largest oil company, and natural gas producer OAO Novatek were among those covered by the penalties.

“There is concern that there will be further sanctions on Russia and that those could have an impact on oil,” said Zambo of Bayerische Landesbank.

Kerry said he’ll push an Egyptian cease-fire initiative that foundered last week in an attempt to stop the latest cycle of fighting in the frequent clashes that have taken place between Israel and Gaza militants since Israel ended a 38-year occupation of the Palestinian territory in 2005.

The Libyan government and protesters have yet to agree on a date to implement an accord to re-open the oil-export port of Brega, Mohamed Elharari, a spokesman for state-run National Oil Corp., said by phone from Tripoli today.

--With assistance from Ben Sharples in Melbourne.