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WTI Crude Gains as Cushing Inventories Slip to Four-Year Low

April 23 (Bloomberg) -- West Texas Intermediate crude gained as supplies dwindled at Cushing, Oklahoma, even as U.S. total inventories reached the highest level in more than 80 years. Brent slipped.

WTI advanced after a day after the biggest drop in three months. Stockpiles at Cushing, the delivery point for New York Mercantile Exchange futures, fell to the lowest level since 2009 last week as the U.S. total rose 3.52 million barrels to 397.7 million, the Energy Information Administration reported. Declines were limited on concern the clash over Ukraine between the West and Russia may intensify.

“Those low Cushing inventories are going to lend support to the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The overall inventory picture is pretty robust. The Ukraine situation is worsening again.”

WTI for June delivery rose 17 cents to $101.92 a barrel at 1:22 p.m. on the Nymex. It ended at a two-week low of $101.75 yesterday. The volume of all futures was 13 percent above the 100-day average.

Brent for June settlement fell 20 cents to $109.07 a barrel on the London-based ICE Futures Europe exchange. Volume was 16 percent below the 100-day average. The European benchmark crude’s premium to WTI narrowed to $7.15 a barrel.

‘Very Bearish’

Supplies at Cushing declined for the 11th time in 12 weeks, falling 788,000 barrels to 26 million. Cushing inventories, which reached 41.8 million Jan. 24, started to fall as new pipeline capacity began moving crude to refineries on the Gulf Coast.

The total inventory level was the highest in EIA weekly data begun in 1982 and monthly government data going back to 1920. Reports before 1976 were based on data from the Bureau of Mines, according to the EIA, and stockpiles of Alaskan crude oil in transit were included starting in 1981.

The 3.52 million-barrel gain was the 13th in 14 weeks. U.S. production rose to a 26-year high of 8.36 million barrels a day.

“There’s plenty of crude,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in Boston. “The high price of crude is more a function of nervousness about the situation in Eastern Europe than anything else.”

Gulf Coast

Supplies on the Gulf Coast, known as PADD 3, increased to 209.6 million, the most since EIA began recording that information in 1990. U.S. oil demand slipped to 18.1 million barrels a day last week, the least since June 7.

“We have more than ample supplies in the U.S.,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s hard to get too excited about WTI when you have so much oil in storage.”

Ukraine moved closer to a new round of hostilities after the government in Kiev said it’s resuming operations to oust militants from eastern cities and Russia pledged to defend its citizens in the neighboring country.

Russian Foreign Minister Sergei Lavrov said his country is prepared to retaliate if its “legitimate interests” are “attacked directly,” drawing a parallel with its actions during a 2008 war over the Georgian breakaway region of South Ossetia.

To contact the reporters on this story: Moming Zhou in New York at mzhou29@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Richard Stubbe, David Marino

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