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WTI Crude Advances on Expected Decline in Distillate Supplies

Feb. 4 (Bloomberg) -- West Texas Intermediate crude rose for the first time in three days on speculation that distillate inventories fell last week amid cold weather and as U.S. equities advanced.

Prices gained as much as 1.3 percent. Distillate supplies, including diesel and heating oil, declined for a fourth week, according to a Bloomberg survey before a report from the Energy Information Administration tomorrow. The Standard & Poor’s 500 Index advanced, rebounding from the biggest loss since June.

“People are watching distillate inventories,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “That’s definitely going to be the major focus. The equity market is coming off the lows and that’s helping crude move higher.”

WTI for March delivery advanced 99 cents, or 1 percent, to $97.42 a barrel at 10:56 a.m. on the New York Mercantile Exchange. The contract fell $1.06 to $96.43 yesterday, the lowest close since Jan. 27. Trading volumes for all WTI contracts on the Nymex were about 1 percent below their 100-day averages.

Brent for March settlement slid 9 cents to $105.95 a barrel on the London-based ICE exchange. Volume was 16 percent below the 100-day average. The European benchmark’s premium to WTI was $8.53, down from $9.61 a barrel yesterday.

Distillate Supplies

Distillate supplies declined by 2.5 million barrels, or 2.2 percent, to 113.7 million last week, the Bloomberg survey showed. The analysts projected that crude supplies climbed 2.55 million barrels to 360.2 million and inventories of gasoline rose 1.15 million to 235.6 million.

Snow will start falling across Boston and New York later today, the National Weather Service said. Freezing rain and sleet will join the mix later tomorrow, Tom Kline, a meteorologist with AccuWeather Inc. in State College, Pennsylvania, said by telephone. About 25 percent of households in the Northeast use heating oil to warm their homes, according to the EIA.

“Weather-related withdrawals of distillate are giving WTI some support,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We’re seeing a bit of consolidation here.”

Distillate supplies dropped 4.58 million barrels in the week ended Jan. 24, the EIA, the Energy Department’s statistical arm, said last week. Demand for the fuel surged 20 percent to 4.52 million barrels a day, the most since February 2008.

Equities Gain

The S&P index advanced as much as 0.7 percent as investors assessed corporate earnings and data showing factory orders fell less than estimated in December. The index dropped 2.3 percent yesterday.

“There’s a little strength in U.S. stocks this morning, which is providing a bit of support,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Factory orders slid by 1.5 percent last month, a Census Bureau report showed. That’s less than the 1.8 percent drop that economists surveyed by Bloomberg forecast.

The EIA says the U.S., the world’s biggest oil-consuming country, will use 18.9 million barrels a day in 2014.

Brent was little changed as the North Sea Buzzard field restarted after halting yesterday, according to Nexen Inc., the field’s operator. The 200,000-barrel-a-day Buzzard field feeds into the Forties blend, one of four grades that make up the Dated Brent benchmark used to price more than half the world’s crude.

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