March 28 (Bloomberg) -- West Texas Intermediate headed for a second weekly gain amid shrinking stockpiles at the U.S. oil storage hub in Cushing, Oklahoma. Brent was also poised for a weekly increase as Libyan supply disruptions continued.
Futures rose as much 0.6 percent in New York after rising 1 percent yesterday to the highest close since March 7. Supplies at Cushing, the delivery point for WTI contracts, fell to a two- year low, government data showed this week. U.S. President Barack Obama said sanctions on Russia over its action in Ukraine may include measures against the country’s energy industry.
“The continued sizable reduction in Cushing inventories has really been a theme this week,” Ole Hansen, the head of commodity strategy at Saxo Bank in Copenhagen, said by phone. “Brent has been supported by continued supply disruptions” including oil theft in Nigeria and unrest in Libya, he said.
WTI for May delivery rose as much as 60 cents to $101.88 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.79 at 10:59 a.m. London time. The contract gained $1.02 to $101.28 yesterday. The volume of all futures traded was about 20 percent below the 100-day average for the time of day. Prices have gained 2.3 percent this week and 3.4 percent this quarter.
Brent for May settlement rose 27 cents to $108.10 a barrel on the London-based ICE Futures Europe exchange. Prices are up 1.1 percent this week and down 2.4 percent this quarter. The European benchmark crude was at a premium of $6.30 to WTI on ICE, after ending the session at $6.55 yesterday.
“Shrinking inventories at Cushing for sure are having a strong impact,” Lee Chung Jai, a senior analyst at IBK Securities Co. in Seoul, said by phone. “The tension between Russia and Ukraine is also leading to debates on whether the U.S. should lift its ban on exports of its energy resources, which I think is another factor that’s been moving the prices.”
Brent’s premium to WTI has narrowed from more than $14 in January. Cushing supplies fell after TransCanada Corp. opened the southern link of its Keystone XL pipeline to refineries and ports along the Texas Gulf Coast, easing a bottleneck.
Total U.S. crude inventories expanded by 6.62 million barrels to 382.5 million, according to the Energy Information Administration, the Energy Department’s statistical arm. That compares with a projected increase of 2.5 million.
WTI may gain next week as stockpiles at Cushing shrink, according to a Bloomberg News survey. Half of the 28 analysts and traders surveyed forecast prices will rise through April 4.
The Movement for the Emancipation of the Niger Delta, a rebel group, claimed another attack on Nigeria’s Forcados oil pipeline yesterday. Royal Dutch Shell Plc declared force majeure, a legal clause that allows companies to miss obligations because of circumstances beyond their control, on Forcados crude shipments to repair the pipeline after a third party interfered with the link, the company said on March 25.
Libya pumped as much as 170,000 barrels a day of oil yesterday, Mohamed Elharari, spokesman for state-run National Oil Corp., said by phone. Most of the country’s oilfields, including Elephant and Sharara, are still halted.
The Organization of Petroleum Exporting Countries will curtail exports by 620,000 barrels a day, or 2.5 percent, to 23.78 million a day in the four weeks to April 12 in response to lower seasonal demand from refiners in Asia, according to tanker-tracker Oil Movements.
The U.S. is working with allies to study finance, military and energy sectors and determine which sanctions would have a “powerful impact” if further actions are needed against Russia, Obama said yesterday at a news conference in Rome.
The U.S. Senate and House passed separate bills imposing additional sanctions on Russian officials for the nation’s annexation of Crimea from Ukraine.
The House measure would codify sanctions already announced by Obama. It would encourage imposing more penalties on Russians with “significant influence over the formation and implementation of Russian foreign policy” involving Crimea, according to the bill’s text.