Brent ends above $116 to three-month high on tight supply

Wed Aug 15, 2012 3:56pm EDT
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By Gene Ramos

NEW YORK (Reuters) - Brent crude oil futures closed above $116 a barrel at the highest level in more than three months on Wednesday, as a sharp drawdown in U.S. crude stockpiles and expectations for lower North Sea oil output painted a tighter supply picture on both sides of the Atlantic.

Fears of supply disruptions as Middle East tensions festered, as well as hopes for further stimulus from major central banks to support the weakening global economy, added lift to oil futures.

U.S. crude oil inventories dropped 3.7 million barrels last week, the third straight week of drawdowns, according to the U.S. Energy Information Administration. A Reuters poll of analysts had forecast a decline of just 1.7 million barrels.

A steep drop in U.S. gasoline stocks due to a series of refinery outages lifted gasoline futures to their highest intraday level since May, gaining nearly 3 percent to lead the petroleum complex.

While the crude stock draw was larger than expected, "more importantly, we see the large dip in gasoline stocks ready to push us higher into the second half of summer," said Carl Larry, president of Oil Outlooks in New York.

In London, September Brent crude posted a session high at $116.72 a barrel and closed at $116.25, up $2.22 or nearly 2 percent. It was the highest settlement for front-month Brent since May 2.

U.S. September crude oil settled at $94.33 a barrel, gaining 90 cents, the highest settlement for front-month U.S. crude since May 14, after hitting a session high of $94.90.

U.S. gasoline stocks fell 2.4 million barrels last week, greater than the 1.5-million-barrel drop predicted. The four-week average demand for refined products in the United States rose to 19.3 million barrels per day, the highest since early September 2011, the EIA data showed.   Continued...

Hong Kong-flagged oil tanker "Yangtze Bravery" sails past the Raffles Lighthouse in southern Singapore April 18, 2012. REUTERS/Tim Chong