US crude oil futures topped $65 (€52) a barrel for the first time since 2014 on Wednesday, with the gap between the North American benchmark and international rival Brent also narrowing sharply.
The move in West Texas Intermediate (WTI) followed a sharp drop in stocks at the contract’s delivery point in Cushing, Oklahoma, with inventories drawing sharply at the storage hub following the ramp up of a new pipeline taking crude from there to Tennessee.
WTI reached a high of $65.42 a barrel, with its discount to Brent narrowing to $5 a barrel, down from around $6.50 at the beginning of the year. Brent, despite lagging WTI on Wednesday, also made a new three-year high, reaching $70.43 a barrel.
Oil’s rally came after the US Energy Information Administration reported crude stocks fell by 1.07 million barrels nationally in the US last week, with the draw down led by a 3.15 million barrel drop at Cushing.
The ramp up in volumes on the 200,000 barrel a day Diamond pipeline from Cushing to Memphis, Tennessee was the main reason stock draws from the key storage and pricing hub have accelerated since the start of the year, traders said.
The Diamond pipeline, operating by Plains All American, was set to be completed in December with volumes ramping up at the start of the year.
In the last four weeks stocks at Cushing have fallen by more than 12 million barrels to 39.24 million barrels and are now down 40 per cent on the same time a year ago.
– Copyright The Financial Times Limited 2018Tags: Business, Commodities, Markets, The Us Energy Information Administration