West Texas Intermediate crude rose to a one-month high after an industry report showed U.S. stockpiles tumbled last week. Brent oil increased on unrest in Libya.
Futures advanced as much as 0.9 percent in New York. Crude supplies dropped by 10.3 million barrels last week, the American Petroleum Institute reported Tuesday.
A government report Wednesday will probably show inventories were unchanged near a record high, according to a Bloomberg survey.
The United States moved a Marine contingent to Italy on Tuesday to prepare for the possible evacuation of American personnel from Libya.
“The 10 million-barrel draw caught us by surprise,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Conn. “If we get confirmation of the API data from Wednesday’s report, prices are headed higher and we’ll probably be testing the year’s highs before long.”
WTI for July delivery increased 90 cents, or 0.9 percent, to $103.23 a barrel at 9:39 a.m. on the New York Mercantile Exchange.
Prices reached $103.29, the highest intraday level since April 22. The volume of all futures traded was 20 percent above the 100-day average for the time of day.
Brent for July settlement gained 40 cents, or 0.4 percent, to $110.09 a barrel on the London-based ICE Futures Europe exchange.
Volume was 11 percent higher than the 100-day average. The European benchmark crude traded at a $6.86 premium to WTI.
U.S. crude inventories rose to 399.4 million barrels April 25, the most since the Energy Information Administration began publishing weekly data in 1982.
Stockpiles probably stood at 398.5 million last week, according to the median estimate of nine analysts surveyed by Bloomberg.
Crude supplies at Cushing, Okla., the delivery point for New York-traded futures, dropped by 261,000 barrels last week, the API said.
Stockpiles have decreased as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from storage in January.
Refinery utilization rose to an average 90.3 percent of capacity, according to the Washington-based API, which collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines.
Data from the EIA, the Energy Department’s statistical arm, will probably show utilization gained 0.5 percentage point to 89.3 percent, the survey shows.
The deployment of U.S. forces was disclosed as former Libyan army general Khalifa Haftar led the self-proclaimed National Army to fight armed Islamist groups that have gained strength in the three years since the overthrow of Muammar Qaddafi.
Haftar’s forces have attacked Islamist groups in Benghazi and stormed Libya’s parliament in Tripoli.
Brent will average $109 a barrel this year, up from an earlier projection of $104, after tension between Ukraine and Russia introduced a “completely unexpected source of geopolitical risk,” according to Seth Kleinman, a Citigroup Inc. (NYSE: C) analyst in London.
Russia’s Prime Minister Dmitry Medvedev warned the U.S. and its allies that they risk provoking a new Cold War as Ukraine said it hasn’t seen signs of a pullback of Russian soldiers in regions along its border.
After annexing Crimea in March, Russia has been accused by the government in Kiev of fomenting unrest ahead of Ukrainian presidential elections scheduled for May 25.
Russia is the world’s second-largest net oil exporter, according to the EIA.