Oil traded near a seven-month high on speculation that U.S. crude stockpiles declined last week while supply losses in Canada and Nigeria whittled away the global excess.
West Texas Intermediate was little changed in New York, while Brent erased gains as it neared $50 a barrel for the first time since November. Inventories probably fell by 3.5 million barrels, the first two-week decrease since September, according to a Bloomberg survey before government data on Wednesday. Wildfires in Canada came to within a kilometer of an Enbridge Inc. oil-sands terminal as warm weather and wind spread the flames.
Oil prices have advanced more than 80 percent from a 12-year low earlier this year on signs the global glut will ease as U.S. production declines. The market has moved into an output deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to Goldman Sachs Group Inc.
“The longer these outages last, the quicker the pace of rebalancing,” said Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London. “Persistent crude stock draws will begin by the end of the second quarter.”
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 steady at $47.69 as of 10:16 a.m. London time. Prices gained $1.51 to $47.72 on Monday, the highest close since Nov. 3. Total volume traded Tuesday was about 13 percent above the 100-day average.
Brent for July settlement dropped 0.7 percent to $48.62 a barrel on the London-based ICE Futures Europe exchange, after earlier climbing 1 percent. The global benchmark crude was at a premium of 23 cents to WTI for July.
U.S. crude inventories dropped by 3.4 million barrels to 540 million barrels through May 6, according to Energy Information Administration data. Stockpiles remain 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.
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.