Oil traded near the highest level in four months in New York as a surprise drop in U.S. crude inventories countered concern that the global economic recovery may falter and curb fuel demand.
West Texas Intermediate was little changed after rising 1 percent yesterday, the most in two weeks. Crude supplies slid 951,000 barrels last week, Energy Department data showed. They were forecast to increase by 2.2 million, according to a Bloomberg survey. WTI’s discount to Brent futures narrowed to less than $15 a barrel for the first time since July after the start of an expanded pipeline that is set to pare a glut in the U.S. Midwest.
“We may see oil demand picking up in the U.S. and this could support prices,” said Gerrit Zambo, an oil trader atBayerische Landesbank in Munich, who predicts Brent may rise as high as $120 a barrel this quarter. “But the supply situation is comfortable.”
WTI for February delivery was at $94.42 a barrel, up 18 cents, in electronic trading on the New York Mercantile Exchangeas of 10:40 a.m. London time. The contract climbed 96 cents to $94.24 yesterday, the most since Jan. 2. It was the highest close since Sept. 18.
Brent for March settlement on the London-based ICE Futures Europe exchange gained 30 cents to $109.98 a barrel. The European benchmark’s premium to WTI earlier narrowed to $14.98, the smallest gap July 25.
WTI dropped 7.1 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing, Oklahoma, America’s largest storage hub and the delivery point for New York contracts. That left it at an average discount of $17.47 a barrel to Brent last year, compared with a premium of about 7 cents in the five years through 2010. Brent, the benchmark grade for more than half the world’s crude, advanced 3.5 percent last year.
Production of Forties crude, the North Sea’s most abundant grade, will climb to 407,143 barrels a day in February, the highest since March, a loading schedule obtained by Bloomberg News showed.
U.S. crude stockpiles fell to 360.3 million in the seven days ended Jan. 11, the Energy Department report showed yesterday. At the same time, supplies at Cushing climbed by 1.8 million barrels to a record 51.9 million
Gasoline inventories increased for an eighth week, the longest rising streak since March 2008, to 235 million barrels. That was the highest level since February 2011. Distillate-fuel supplies, including heating oil and diesel, advanced to 132.4 million, the highest since March, according to the data.