West Texas Intermediate climbed for a third day on estimates that U.S. oil inventories declined last week as refineries processed record amounts of crude for this time of year.
Stockpiles may have declined for a seventh time in the week ended Aug. 8, according to a Bloomberg survey before an Energy Information Administration report on Aug. 13. Refineries used 16.4 million barrels of oil a day in the week ended Aug. 1, the most since EIA began weekly data in 1989. Brent narrowed its premium over WTI on speculation that U.S. air strikes in Iraq diminished the threat to oil supplies posed by insurgents.
“We are still seeing that trend here in the U.S. in terms of strong refinery demand,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “There is a bit of an argument for WTI to be supported as result of localized demand.”
WTI for September delivery advanced 65 cents, or 0.7 percent, to $98.30 a barrel on the New York Mercantile Exchange. Volume was 1.9 percent above the 100-day average.
Brent crude for September settlement gained 19 cents to $105.21 a barrel on the ICE Futures Europe exchange on volume that was 28 percent below the 100-day average for all contracts. WTI traded at a $6.92 discount to Brent on ICE, compared with $7.37 on Aug. 8.
U.S. crude inventories decreased by 1.3 million barrels in the week ended Aug. 8, according to the median of five analyst estimates in the survey. Stockpiles dropped to 365.6 million barrels in the week ended Aug. 1, the lowest level since Feb. 28, according to the EIA, the Energy Department’s statistical arm.
Refineries operated at 92.4 percent of their capacity. The utilization rate may have dropped 0.7 percentage point last week, the survey showed. CVR Energy Inc. shut down the Coffeyville refinery in Kansas after a July 29 fire. The 115,000-barrel-a-day plant receives crude from Cushing, Okla., the delivery point for WTI futures.
“Runs have weakened due to unplanned outages,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “I don’t see any significant planned turnaround yet. The utilization rates have been high for some time and they will remain quite high.”
U.S. refineries typically schedule maintenance for September and October, when they move from maximizing gasoline output to producing winter fuels.
Brent gained less than WTI. Kurdish forces retook yesterday the towns of Makhmour and Gwer, south of Erbil, where militants retreated after U.S. airstrikes, according to the Kurdish news agency Rudaw, citing officials.
The conflict has spared production in Iraq’s south, home to about three-quarters of its crude output.
“We are looking at a stable market here,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “People are cautious but not reacting until something happens. Nobody cares what’s going on until we see a real disruption of oil.”