May 14 (Bloomberg) -- West Texas Intermediate crude rose to the highest price in three weeks as a government report showed stockpiles fell at Cushing, Oklahoma, the delivery point for the futures. Brent oil rose.
WTI climbed for a third day. Inventories at Cushing shrank 592,000 barrels last week, and U.S. gasoline demand increased to a six-month high, the Energy Information Administration said. Brent advanced on concern that escalating tension in Ukraine will disrupt global energy supplies.
“Cushing just happens to be a focal point,” Kyle Cooper, director of commodities research at IAF Advisors in Houston, said in a phone interview. “It’s an area attached to the financial contracts. The market wants to go higher. Petroleum demand is pretty strong.”
WTI for June delivery increased 76 cents, or 0.7 percent, to $102.46 at 12:04 p.m. on the New York Mercantile Exchange after rising to $102.65, the highest intraday price since April 22. The volume of all futures traded was 22 percent above the 100-day average for the time of day.
Brent for June settlement, which expires tomorrow, gained 81 cents, or 0.7 percent, to $110.05 a barrel on the London- based ICE Futures Europe exchange. Volume was 30 percent above the 100-day average. The European benchmark crude traded at a premium of $7.59 to WTI, compared with $7.54 yesterday.
Cushing stockpiles dropped for the 14th time in 15 weeks, falling to 23.4 million barrels, the fewest since Dec. 5, 2008, according to the EIA, the Energy Department’s statistical arm. Stockpiles have decreased since January as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from the hub.
The declines are “taking Cushing stocks close to operational minimum levels,” Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London, said by e-mail.
Morgan Stanley said last week that the minimum operating level for Cushing storage is about 20 million barrels.
“Cushing is close to the minimum operating levels and it’s very bullish for the market,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “More people are using gasoline and demand will continue to be strong.”
There’s enough oil at Cushing to fulfill the Nymex contracts, Gary Morsches, managing director of energy products at CME Group Inc., which owns the exchange, said at Platts Global Crude Oil Summit in London.
Total petroleum consumption rose to 19.4 million barrels a day last week, the highest level since Jan. 24, the EIA said. Demand for gasoline increased to 9.19 million, the most since Nov. 1.
U.S. crude inventories increased 947,000 barrels to 398.5 million. They reached 399.4 million in the week ended April 25, the most since the EIA began reporting weekly data in 1982.
“We don’t have a shortage in crude supply,” Cooper said.
Ukraine “is as close to civil war as you can get” and a solution must be found that satisfies all regions, Russian Foreign Minister Sergei Lavrov said in an interview today with Bloomberg Television at the Foreign Ministry building in central Moscow. There’s already a “real war” between government forces and separatist fighters in the country’s east and south, Lavrov said.
Russia, the world’s biggest energy exporter, is locked in the worst standoff since the end of the Cold War against the U.S. and Europe over Ukraine in the run-up to Ukraine’s scheduled presidential election on May 25.
“You still have the ongoing crisis in Ukraine that’s providing some background support,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.