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WTI Oil Rises to Two-Week High on U.S. Data, Narrowing Brent Gap

March 28 (Bloomberg) -- West Texas Intermediate crude reached a two-week high as U.S. consumer spending rose in February by the most in three months. WTI narrowed the discount to Brent, which was little changed.

WTI increased as much as 0.9 percent and headed for a second weekly advance. Household purchases, which account for almost 70 percent of the economy, climbed 0.3 percent, the Commerce Department said. Brent gave up an earlier advance on concern that tension in Ukraine would escalate.

“The market’s taking the consumer spending number positively,” said Paul Crovo, a Philadelphia-based oil analyst at PNC Capital Advisors. “The economy will continue to forge ahead. There is a lot of concern about what’s going on in Ukraine and Russia’s possible incursions.”

WTI for May delivery rose 41 cents, or 0.4 percent, to $101.69 a barrel at 12:41 p.m. on the New York Mercantile Exchange after reaching $102.24, the highest intraday level since March 10. Trading was 33 percent below the 100-day average for the time of day. Prices have gained 2.3 percent this week and 3.3 percent this quarter.

Brent for May settlement increased 5 cents to $107.88 a barrel on the London-based ICE Futures Europe exchange. Prices are up 1.1 percent this week and down 2.5 percent this quarter. The European benchmark crude was at a premium of $6.19 to WTI on ICE, down from $6.55 yesterday.

Consumer Purchases

Consumer purchases increased 0.2 percent last month after adjusting spending for inflation, also the best performance since November, the Commerce Department reported. The Standard & Poor’s 500 Index advanced.

“The economy is getting modestly better,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “The oil market is concerned about Ukraine. It’s increasingly difficult to make a bearish case for oil.”

Russia massed troops along the Ukraine border after annexing Crimea and rejected a United Nations resolution condemning that takeover.

Brent gained earlier as Russia massed troops along the Ukraine border after annexing Crimea and rejected a United Nations resolution condemning that takeover, then fell back.

Watching Ukraine

Russia’s military action along the border may be an effort to intimidate Ukraine or “it may be that they’ve got additional plans,” President Barack Obama said in an interview broadcast today on “CBS This Morning.” The U.S. House of Representatives is ready to clear legislation providing aid to Ukraine and imposing further sanctions on Russian officials for the annexation of Crimea.

WTI advanced this week as inventories at Cushing, Oklahoma, the futures delivery point, fell to a two-year low. Supplies were 28.5 million barrels, the lowest level since January 2012, the EIA, the Energy Department’s statistical arm, said on March 26.

Inventories there have decreased since January, when the southern link of TransCanada Corp.’s Keystone XL pipeline started shipping crude to Gulf Coast refineries. Total U.S. stockpiles increased to 382.5 million, the most since November.

“We’ve seen a gradual narrowing of the WTI-Brent differential over the past week as prices have climbed,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Cushing is the reason for this narrowing.”

WTI may gain next week, according to a Bloomberg News survey. Half of the 28 analysts and traders surveyed forecast prices will rise through April 4.

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