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WTI Set for Monthly Gain as Cushing Supplies Drop; Brent Steady

May 30 (Bloomberg) -- West Texas Intermediate headed for its first monthly advance since February as crude inventories shrank at the delivery point for New York contracts. Brent was steady in London, poised for a second monthly gain amid separatist violence in Ukraine.

Futures were little changed after rising 0.8 percent yesterday. Stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub, dropped by 1.53 million barrels last week to the lowest level since November 2008, according to the Energy Information Administration. Supplies nationwide expanded by 1.66 million, compared with a 500,000 barrel gain estimated in a Bloomberg News survey.

“Cushing is certainly a factor” supporting front-month WTI prices, Tony Machacek, a broker at Jefferies Bache Ltd. in London, said by e-mail. “Total stocks are high, so there shouldn’t be any strong fundamental reason for prices to move too much higher.”

WTI for July delivery was at $103.20 a barrel in electronic trading on the New York Mercantile Exchange, down 38 cents, at 9:16 a.m. London time. The contract climbed 86 cents to $103.58 yesterday. The volume of all futures traded was about 38 percent below the 100-day average. Prices are up 3.5 percent this month.

Brent for July settlement was 7 cents lower at $109.90 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.65 to WTI, compared with $8.33 at the end of April.

Crude Supplies

Stockpiles at Cushing fell to 21.7 million barrels, declining for the 16th time in 17 weeks, the EIA, the Energy Department’s statistical arm, said yesterday. Supplies have decreased since the southern leg of the Keystone XL pipeline began moving crude to Gulf Coast refineries in January.

Total U.S. crude inventories rose to about 393 million barrels in the seven days ended May 23, the report shows. Supplies were at 399.4 million through April 25, the most since the EIA began publishing weekly data in 1982.

“Inventories tell us we’re awash but the market wants to believe in demand,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “Every time oil moves lower it holds and that tells us the market wants to buy. We could be in for a sustained price increase.”

Gasoline stockpiles slid by 1.8 million barrels to 211.6 million, compared with a median forecast for no change in the Bloomberg survey of 11 analysts. Refinery utilization climbed for the first time in five weeks to 89.9 percent of capacity, according to the EIA.

WTI may fall next week amid speculation that crude supplies will be sufficient to meet demand, a separate Bloomberg survey shows. Nineteen of 36 analysts and traders, or 53 percent, said futures will decline through June 6 while 12 respondents predicted a price gain.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Lananh Nguyen in London at lnguyen35@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Rachel Graham, Dan Weeks

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