WTI Crude Near $101 as Fuel Stockpiles Advance, Economy Expands

Jul 30, 2014 10:52 am ET

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July 30 (Bloomberg) -- West Texas Intermediate crude traded near $101 a barrel after a government report showed that U.S. fuel inventories advanced and as the country’s economy rebounded more than forecast in the second quarter.

Gasoline inventories gained for a fourth week and diesel stockpiles rose for a ninth week. Crude stockpiles fell 3.7 million barrels to 367.4 million in the week ended July 25, according to the Energy Information Administration. A 1.25 million-barrel decline in supply was projected by analysts surveyed by Bloomberg. Gross domestic product rose at a 4 percent annualized rate after shrinking 2.1 percent from January through March, Commerce Department figures showed today.

WTI for September delivery advanced 7 cents to $101.04 a barrel at 10:51 a.m. on the New York Mercantile Exchange. Futures traded at $101.44 before the release of the report at 10:30 a.m. in Washington. The volume of all futures traded was 14 percent below the 100-day average.

Brent for September settlement slipped 24 cents to $107.48 a barrel on the London-based ICE Futures Europe exchange. Volume was 30 percent lower than the 100-day average. The European benchmark crude traded at a $6.44 premium to WTI on ICE. The spread closed at $6.75 yesterday, the widest since July 4.

Crude supplies at Cushing, Oklahoma, fell by 924,000 barrels to 17.9 million last week. The decline left stockpiles at the lowest level since October 2008, data from the EIA, the Energy Department’s statistical arm, showed.

Fuel Stockpiles

Inventories of gasoline increased 365,000 barrels to 218.2 million, the highest level since March 14, the report showed. Supplies were projected to rise by 1 million barrels, according to the median of 10 analyst estimates in the Bloomberg survey. Distillates rose 789,000 barrels to 126.7 million.

Gasoline demand slipped 0.5 percent to an average 8.95 million barrels a day in the past four weeks, the least since May.

Gasoline for August delivery dropped 0.34 cent to $2.8675 a gallon on the Nymex. Ultra low sulfur diesel for August delivery declined 0.57 cent to $2.901.

U.S. gasoline pump prices dropped 0.2 cent to $3.513 a gallon nationwide yesterday, the lowest since March 13, according to AAA, the largest U.S. motoring group.

Gains in consumer spending and business investment helped bolster the U.S. economy in the last quarter following a slump in the prior three months that was smaller than previously estimated.

Beating Expectations

The median forecast of 80 economists surveyed by Bloomberg called for a 3 percent advance. Consumer spending, the biggest part of the economy, rose 2.5 percent, reflecting the biggest gain in purchases of durable goods such as autos in almost five years. The first-quarter reading was revised up from a previously reported 2.9 percent drop.

“The U.S. economic data is a positive signal,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “It could be a sign of increased demand.”

The European Union agreed yesterday to bar state-owned Russian banks from selling shares or bonds in Europe, restricting the export of equipment to modernize the oil industry and barring the sale of equipment with military uses. The EU acted after pro-Russian separatists continued to impede an investigation into the July 17 downing of a Malaysian airliner by a surface-to-air missile over eastern Ukraine.

U.S. crude production fell 122,000 barrels a day to 8.443 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.