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WTI Reaches Two-Week High on Supply Outlook; Brent Premium Slips

May 13 (Bloomberg) -- West Texas Intermediate oil rose to a two-week high on amid speculation that U.S. crude inventories dropped a second week. The premium of Brent to WTI narrowed.

Futures advanced as much as 0.9 percent in New York. Crude supplies probably slipped 500,000 barrels to 397.1 million last week, according to a Bloomberg survey before a government report tomorrow. Stockpiles reached 399.4 million in the week ended April 25, the highest level since the government began publishing weekly data in 1982. Stockpiles at Cushing, Oklahoma, the delivery point for WTI, probably fell from a five-year low.

“There’s a lot of positioning taking place in advance of tomorrow’s inventory report,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. ‘The consensus is for a second draw. After climbing to a record just a couple weeks ago, it appears that the days of testing 400 million barrels are over.’’

WTI for June delivery rose 55 cents, or 0.6 percent, to $101.14 a barrel at 10:24 a.m. on the New York Mercantile Exchange. Futures touched $101.52, the highest intraday level since April 29. The volume of all futures traded was 15 percent above the 100-day average for the time of day.

Brent for June settlement increased 20 cents to $108.61 a barrel on the London-based ICE Futures Europe exchange. Volume was 19 percent higher than the 100-day average. The European benchmark crude traded at a $7.47 premium to WTI, down from $7.82 at yesterday’s close.

Stockpiles Slip

U.S. crude stockpiles slipped 1.78 million barrels in the week ended May 2, according to the Energy Information Administration, the Energy Department’s statistical arm. The EIA is scheduled to release last week’s inventory data tomorrow at 10:30 a.m. in Washington.

Gasoline inventories probably rose by 300,000 barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg. Supplies of distillate fuel, a category that includes heating oil and diesel, increased by 500,000 barrels, the survey shows.

Rebels in eastern Ukraine said they’re seeking to join Russia after disputed referendums. The U.S. and the European Union have said they’re willing to add to sanctions imposed after Russia annexed Crimea in March if President Vladimir Putin doesn’t do more to quell unrest in Ukraine.

“It’s clear we’re moving on inventory projections because much of the geopolitical and financial news we pay attention to is bearish,” Yawger said. “There continues to be unrest in eastern Ukraine but Putin has made no move to annex the region. The dollar is showing continuing strength as well, which should be sending us lower.”

Currency Moves

The dollar climbed to the highest level in more than a month against the euro. The U.S. currency rose as much as 0.4 percent. A stronger dollar reduces the appeal of dollar- denominated raw materials as an investment.

The global oil market will remain “fairly balanced” this year as supply disruptions including delays at the Kashagan field in Kazakhstan prevent the buildup of a surplus, according to the monthly oil market report from the Organization of Petroleum Exporting Countries published today.

OPEC, responsible for about 40 percent of the world’s oil supply, estimates it will need to provide an average of 29.8 million barrels a day this year, about 100,000 a day more than the group projected last month. OPEC raised the estimate because of lower output of natural gas liquids, the group’s Vienna-based research department said.

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