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WTI rises to 7-week high; distillate supplies drop

West Texas Intermediate rose to its highest intraday level in seven weeks, after an industry report showed U.S. distillate supplies shrank and a potential historic winter storm threatens to coat Georgia with ice.

Futures gained as much as 0.8 percent in New York, where heavy snow is forecast.

Distillate fuels, including heating oil and diesel, fell by 1.45 million barrels last week, the American Petroleum Institute said Tuesday after the market settlement.

Government data Wednesday will show a drop of 2.1 million barrels, according to a Bloomberg News survey.

China, the second-biggest oil consumer, imported a record amount of crude for a second month in January, customs data showed.

“We’ve had a strong winter in the U.S., especially in the north-east and this is why heating oil demand in the U.S. has increased,” said Frank Klumpp, an analyst at Landesbank Baden- Wuerttemberg in Stuttgart, Germany. “Until we have some normalization of the weather in the U.S., there’s the probability prices will move sideways.”

WTI for March delivery climbed as much as 75 cents to $100.69 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Dec. 27, and was at $100.58 as of 12:35 p.m. London time.

The volume of all futures traded was about 13 percent above the 100-day average. Prices are up 2.1 percent this year.

Brent for March settlement, which expires tomorrow, increased as much as 48 cents to $109.16 a barrel on the London- based ICE Futures Europe exchange.

The more-active April contract was up 34 cents at $108.52. The European benchmark crude was at a premium of $8.41 to WTI on the ICE exchange, compared with $8.74 Tuesday.

Sharara oilfield

Production at Libya’s Sharara oil field, the nation’s second-largest, tumbled by 75 percent after armed men closed a valve on a pipeline carrying crude from the field to storage tanks at the western port of Zawiya, Oil Ministry executive Ibrahim Al Awami said by phone from Ras Lanuf. Sharara was pumping about 327,000 barrels a day in early January.

OPEC crude production gained for a second month in January as the group boosted its forecast for global oil-demand growth this year.

The Organization of Petroleum Exporting Countries, responsible for 40 percent of the world’s oil, said in its monthly report that supply from its 12 members increased by 28,000 barrels a day to 29.71 million barrels a day in January.

Chinese imports

China’s oil purchases increased about 12 percent from a year ago to 28.15 million metric tons, according to data on the website of the General Administration of Customs in Beijing Wednesday. That’s about 6.66 million barrels a day, 5.2 percent more than the previous record of 6.33 million in December.

WTI advanced in the four weeks through Feb. 7, the longest rising streak since July, as colder weather in the U.S. boosted demand for energy.

Distillate inventories decreased to 113.8 million in the seven days ended Jan. 31, the lowest level for that time of year since 2003, according to the Energy Information Administration.

The winter storm will also bring heavy snow to cities in the U.S. northeast. New York may get as much as 8 inches (20 centimeters) starting late Wednesday and Washington at least 5 inches, the National Weather Service said.

U.S. crude stockpiles expanded by 2.13 million barrels last week, the API data showed.

The EIA, the Energy Department’s statistical arm, will probably report a gain of 2.6 million barrels Wednesday, according to the median estimate of 10 analysts surveyed by Bloomberg.

“Severe” winter weather will curb a surge in U.S. oil production as low temperatures restrict drilling and the completion of new wells, according to the EIA.

The nation may pump 120,000 barrels a day less than projected this year and 100,000 less in 2015, it said in its monthly Short-Term Energy Outlook Tuesday.

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