Crude breaks $65 as record drawdown whittles U.S. oil stockpiles

Futures gained as much as 1.3% in New York. Crude in American tanks and terminals slipped last week to the lowest since February 2015, while inventories at the nation’s biggest storage also swung lower. Demand for stored supplies in the world’s biggest economy has been robust at a time of year when it’s usually weakening because of refinery repairs, all against the backdrop of production curbs by OPEC, Russia and other major suppliers.

“Demand is outpacing supply,” Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. “The OPEC curtailments are helping and their compliance has been relatively strong.”

Oil hit the highest levels since 2014 in New York amid optimism over shrinking supplies in the U.S. and as a group of producing nations led by the Organization of Petroleum Exporting Countries and Russia showed unity on supply reductions through at least the end of this year.

West Texas Intermediate for March delivery jumped 63 cents to $65.10/bbl at 11 a.m. on the New York Mercantile Exchange, the highest level since December 2014. Total volume traded was about 23% above the 100-day average.

Brent for March settlement climbed 39 cents to $70.23 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.05 to WTI.

The Energy Information Administration on Wednesday said inventories at the key Cushing, Okla., pipeline hub fell to the lowest level since January 2015, while gasoline stockpiles climbed for an 11th week and distillate stockpiles also increased.

“What the U.S refinery complex is seeing is really high demand for gasoline and diesel worldwide,” Kessens, said. The arbitrage “gives the U.S. an incentive to export refined products.”