(Bloomberg) -- West Texas Intermediate crude rose to the highest level this year on speculation that U.S. stockpiles shrank for the first time in a month and as orders placed with U.S. factories rose in May.
Crude gained for the sixth time in seven days as inventories may have dropped last week to the lowest level since May 31, according a Bloomberg survey before government data tomorrow, signaling increased demand in the world’s largest oil- consuming country. Factory bookings rose 2.1 percent, the Commerce Department said. Brent’s premium over WTI narrowed to the lowest since January 2011.
"There is still some room for some bullish supply numbers," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "You really want to sell oil ahead of inventory data that may show some sharp drops? There is a lot of price chasing going on."
WTI for August delivery gained 99 cents, or 1 percent, to $98.98 a barrel at 10:33 a.m. on the New York Mercantile Exchange after reaching $99.17, the highest intraday level since Sept. 17. The volume of all futures traded was 139 percent above the 100-day average.
Brent for August settlement rose 65 cents, or 0.6 percent, to $103.65 a barrel on the London-based ICE Futures Europe exchange. Volume was 1.6 percent above the 100-day average. The European benchmark grade’s premium to WTI narrowed to as little as $4.56 a barrel.
U.S. crude stockpiles fell 2.25 million barrels, or 0.6 percent, to 391.9 million in the week ended June 28, the Bloomberg survey showed. Refineries probably increased operating rates to the highest level in more than 10 months as motor fuel production climbed before the U.S. Independence Day holiday on July 4, the survey showed.
Total petroleum consumption in the U.S., the world’s biggest oil consuming country, increased 3 percent in the week ended June 21 to 19 million barrels a day, the EIA, the Energy Department’s statistical arm, reported last week.
Motor-fuel demand is highest from the last weekend in May to the Labor Day weekend in early September, the prime vacation season in the U.S.
"It’s the peak demand season," said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. "The path of least resistance is higher."