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WTI Oil Heads for Monthly Gain on Cushing; Brent Holds Near $109

Feb. 28 (Bloomberg) -- West Texas Intermediate crude headed for a monthly gain as inventories at Cushing, Oklahoma, dropped and the euro strengthened against the dollar. Brent was little changed near $109 a barrel.

WTI traded above $100 for a 15th day. Stockpiles at the futures’ delivery point slid 7.04 million barrels in the four weeks ended Feb. 21 as the southern leg of TransCanada Corp.’s Keystone XL pipeline moved oil to Texas from the hub. The euro surged to a 2014 high against the dollar. Crude also advanced as the Standard & Poor’s 500 Index reached a record.

“The market will continue to remain over $100,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “There is no reason for Cushing inventories to build in the near term. The dollar looks very bad against the euro and that supports the prospect for stronger crude prices.”

WTI for April delivery climbed 11 cents to $102.51 a barrel at 11:40 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 33 percent below the 100-day average. Prices are up 5.1 percent this month.

Brent for April settlement decreased 2 cents to $108.94 a barrel on the London-based ICE Futures Europe exchange. Volume was 8.6 percent below the 100-day average. The European crude was at a $6.43 premium to WTI. The spread closed at $6.56 yesterday, the narrowest since October.

Cushing Inventories

Cushing stockpiles decreased to 34.8 million last week, the least since Oct. 18, the Energy Information Administration, the Energy Department’s statistical arm, reported Feb. 26. Supplies have shrunk since TransCanada said in January that it began operating the Keystone XL link at a rate of 288,000 barrels a day. The company plans to ramp it up over the course of the year to its capacity of 700,000 barrels a day.

“We should have smaller Cushing inventories and it should be bullish for WTI,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

U.S. crude supplies and inventories in states along the Gulf Coast, a region known as PADD 3, both increased for a sixth week. Total stockpiles grew 68,000 barrels last week to 362.4 million. Supplies in PADD 3 went up 1.55 million barrels to 177.7 million. Oklahoma is in PADD 2, the Midwestern region.

“We are seeing a transfer of crude to the Gulf,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.

The euro surged as much as 0.8 percent to $1.3824 as inflation in the 18-nation currency bloc exceeded analyst estimates, damping speculation the European Central Bank will add to stimulus next week. A strong euro and weaker dollar increase crude’s investment appeal.

Stronger Euro

“The euro is probably giving crude support,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

The S&P 500 climbed as much as 0.6 percent on speculation that the Federal Reserve will continue to support the economy as U.S. gross domestic product expanded at a slower pace in the fourth quarter than previously estimated.

GDP grew at a 2.4 percent annualized rate, compared with a 3.2 percent gain reported last month, revised figures from the Commerce Department show. Today’s report is the second of three for the quarter, with the final reading next month when more data are available.

For all of 2013, the economy expanded 1.9 percent after a 2.8 percent increase in the prior year. The U.S. will use 18.9 million barrels a day of oil this year, according to the Energy Information Administration.

“WTI is going to trade between $100 and $104 until we see proof of strong economic growth,” McGillian said.

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