Oil advances to seven-month high as U.S. stockpiles seen falling

Oil advanced to a seven-month high on Tuesday and this was before U.S. government data forecast showing crude stockpiles dropped for a second week, easing a glut.

Brent for July settlement added as much as 50 cents, or 1 percent, to $49.47 a barrel on the London-based ICE Futures Europe exchange. The contract increased $1.14, or 2.4 percent, to $48.97 on Monday. The global benchmark crude was at a premium of 36 cents to WTI for July.

U.S. crude inventories dropped by 3.4 million barrels to 540 million barrels through May 6, according to EIA data. Stockpiles are at the highest level in more than eight decades. Gasoline supplies probably declined by 1.25 million barrels last week, according to the median estimate in the Bloomberg survey.

Futures climbed as much as 1.5 percent in New York after rising 3.3 percent Monday. Inventories are seen falling by 3.5 million barrels, the first two-week decrease since September, according to a Bloomberg survey before Energy Information Administration data Wednesday. Wildfires raging across Canada for more than two weeks have come to within a kilometer of an Enbridge Inc. oil-sands transportation terminal as warm weather and wind spread the flames.

Oil has advanced more than 80 percent since slumping to the lowest in 12 years earlier this year on signs the global glut will ease as U.S. production declines. The market moved into a deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to Goldman Sachs Group Inc.

“A range of factors have come together to produce a sharp boost in prices,” Angus Nicholson, an analyst at IG Ltd. in Melbourne, said by phone. “We’ve had major disruptions in May with Canada and Nigeria and a far bigger increase in demand from places such as India. It’s feasible that oil could rise above $50.”

West Texas Intermediate for June delivery rose as much as 70 cents to $48.42 a barrel on the New York Mercantile Exchange, the highest since Oct. 13 on an intraday basis. The contract was at $48.34 at 7:59 a.m. London time. Prices gained $1.51 to $47.72 on Monday, the highest close since Nov. 3. Total volume traded was about 1 percent above the 100-day average.

Fire crews are “working hard” with bulldozers to keep the blaze from the Cheecham Terminal operated by Enbridge about 75 kilometers (47 miles) southeast of Fort McMurray, Alberta Premier Rachel Notley said Monday.

Competing administrations of Libya’s state-run National Oil Corp. in the east and west of the divided country agreed to resume exports from Hariga port to help revive production.

A freeze on oil output is needed to stabilize prices, Salah Khebri, minister of energy and mines for Algeria, said in an interview in Amman.