Demand fuels oil near record high

Crude oil traded little changed near a record in New York on speculation demand will outpace supply as refiners increase production.

US oil stockpiles probably fell for a fourth week, according to a survey of 14 analysts by Bloomberg News before a government report is released today. Refiners may have increased operating rates for a sixth week to meet gasoline demand, the survey showed.

"We are going to start to see some pretty significant draws in US crude oil inventories,'' said Francisco Blanch, the head of global commodity research at Merrill Lynch & Co in London. "The physical crude oil markets have tightened quite a bit in recent months.''

Crude oil for September delivery was at $78.03 a barrel, down 18 cents, in after-hours electronic trading on the New York Mercantile Exchange at 9:44 am in London.

Yesterday, the contract rose $1.38, or 1.8 percent, to $78.21, the highest close since trading began in 1983. Futures touched $78.28, the highest intraday price since a record $78.40 on July 14, 2006.

US crude-oil inventories probably fell 1.1 million barrels in the week ended July 27 from 351 million barrels the prior week, according to the survey, conducted before the Energy Department report at 10:30 a.m. in Washington today.

Refineries may have operated at 92 percent of capacity, up 0.3 percentage point from the week before, according to the survey. Gasoline inventories probably gained 125,000 barrels last week.

Brent crude oil for September settlement was at $76.94 a barrel, down 11 cents, in electronic trading on the ICE futures exchange at 9:03 a.m. in London. It touched a record $78.64 on Aug. 7 after BP Plc closed Alaska's Prudhoe Bay oil field.

Brent, which is produced in the North Sea, lost its premium over West Texas Intermediate blend, the U.S. benchmark, last week. Brent had been higher than New York-traded WTI for most of this year as crude-oil supplies rose at Cushing, Oklahoma, the delivery point for Nymex futures.

The US grade traded at a record $6.54 a barrel discount to Brent on May 24, based on closing futures prices.

In US dollars, WTI has risen 4 percent in the past 12 months. It has dropped 2 percent in euros, 4 percent in British pounds and risen 7 percent in yen.