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Oil climbs to 10-month high as falling US supplies trim glut
[LONDON] Oil advanced to the highest level in more than 10 months as weekly US industry data showed crude stockpiles declined, reducing a glut.
Futures rose 1.3 per cent in New York after climbing 3.6 per cent the previous two sessions to close above US$50 a barrel Tuesday for the first time since July. Inventories fell by 3.57 million barrels last week, the American Petroleum Institute was said to report. Repair work on a key Nigerian oil pipeline operated by Royal Dutch Shell Plc is under way, according to a person familiar with the matter.
Oil has surged more than 90 per cent from a 12-year low in February amid unplanned disruptions and a steady slide in US output, which is under pressure from the Organization of Petroleum Exporting Countries' policy of pumping without limits. US gasoline consumption is set to climb to a record this summer as the lowest retail prices in more than a decade encourage people to take to the roads, according to government data.
"The risk for prices remains on the upside as new highs attract more buyers who don't want to miss the train," Michael Poulsen, an analyst at Global Risk Management Ltd, said by e- mail. "Continued supply disruptions in Nigeria as well as a draw in US crude inventories are supporting the market."
West Texas Intermediate for July delivery rose as much as 76 cents to US$51.12 a barrel on the New York Mercantile Exchange, the highest since July 20, and traded for US$51.02 at 11:39 am London time. The contract gained 67 cents, or 1.4 per cent, to US$50.36 on Tuesday. Total volume traded was about 8 per cent below the 100-day average.
Brent for August settlement rose 70 cents to US$52.14 a barrel on the London-based ICE Futures Europe exchange. The contract rose 89 cents, or 1.8 per cent, to US$51.44 on Tuesday. The global benchmark traded at a premium of 54 cents to WTI for August.
Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, fell by 1.31 million barrels last week, the API said Tuesday, according to people familiar with the figures. Nationwide inventories slid by 3 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday.