“Crude oil advanced, with West Texas Intermediate surpassing $100 a barrel for the first time in nine months, on shrinking U.S. stockpiles and concern that political turmoil in Egypt may disrupt Middle Eastern supply.
Futures rose as much 2.6 percent in New York after climbing to the highest settlement price in 14 months. Crude inventories fell by 9.4 million barrels last week, the American Petroleum Institute said yesterday. A government report today may show a drop of 2.25 million, according to a Bloomberg News survey. Egypt’s President Mohamed Mursi rejected an ultimatum by the armed forces to solve the country’s political impasse, fanning concern that unrest may interrupt oil shipments through the Suez Canal or Suez-Med pipeline.
“People are expecting to see a large draw-down in inventories in Cushing, and that is supporting the WTI market much more than the Brent market,” Torbjoern Kjus, a senior oil analyst atDNB ASA (DNB) in Oslo, said by phone, referring to the Oklahoma town serving as a U.S. storage hub. “The Brent market is supported by geopolitical risks due to tensions in Egypt.”
WTI for August delivery increased as much as $2.58 to $102.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.96 at 11:43 a.m. London time. The volume of all futures traded was more than four times the 100-day average. The contract gained $1.61 to $99.60 yesterday, the highest close since May 2012.
Brent for August settlement rose as much as $1.61, or 1.6 percent, to $105.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $3.86 to WTI. The spread was $4.40 yesterday, the narrowest based on closing prices since Jan. 4, 2011. It was more than $23 in February.
UBS AG sees the spread widening again to $12 a barrel in the third quarter this year and narrowing later. Brent is set to rebound to $110 a barrel in the third quarter “on stronger short-term fundamentals and rising geopolitical risk,” Julius Walker, the bank’s global energy markets strategist, said in an e-mailed report today…..”Twitter