WTI Oil Near Highest in 16 Months as Brent Spread Falls Below $1

West Texas Intermediate traded near the highest price in 16 months after U.S. jobless claims declined. WTI's discount to Brent narrowed to less than $1 for the first time since October 2010 as U.S. inventories fell.

Futures were little changed in New York after gaining 1.5 percent yesterday, the most in more than a week. The Labor Department said jobless claims dropped to the fewest since early May. WTI settled 89 cents below Brent yesterday, the narrowest discount since Oct. 18, 2010.

WTI for August delivery was at $108.05 a barrel, up 1 cent in electronic trading on the New York Mercantile Exchange at 7:44 a.m. Singapore time. The volume of all futures traded was 65 percent lower than the 100-day average. Prices advanced $1.56 a barrel to $108.04 yesterday, the highest settlement since March 19, 2012.

Brent for September settlement rose 9 cents, or 0.1 percent, to $108.70 a barrel on the ICE Futures Europe Exchange yesterday. Volume was 22 percent lower than the 100-day average.

WTI, the main U.S. crude grade, had typically been the more expensive grade until mid-2010. The convergence between Brent, a gauge for more than half the world’s oil, and WTI shows how improved pipeline networks and the use of rail links have helped to unlock a glut at America’s oil-storage hub at Cushing, Oklahoma.

Stockpiles at Cushing dropped 3.57 million barrels in the two weeks ended July 12 to 46.1 million, the least since Nov. 30, the Energy Information Administration reported July 17. Total crude inventories fell by 6.9 million barrels to 367 million.

(Source: Bloomberg)