U.S. crude-oil futures finished above $90 a barrel for the first time in more than a month Tuesday, as traders looked to a likely drop in U.S. oil inventories and shrugged off forecasts calling for weaker oil demand.
Light, sweet crude oil for October delivery settled up $2.02, or 2.3%, to $90.21 a barrel on the New York Mercantile Exchange. That was the highest settlement since Aug. 3. Its intraday high of $90.52 a barrel marked the highest trade since Aug. 3.
Nymex crude oil pushed higher ahead of a government survey on U.S. oil inventories, due Wednesday at 10:30 a.m. EDT. The survey is expected to show crude-oil stockpiles fell 3.1 million barrels last week, according to a poll by Dow Jones Newswires, which analysts attribute to disruptions to oil production and imports caused by Tropical Storm Lee.
This is likely led to "supply constraints," said Peter Donovan, vice president of oil options brokerage Vantage Trading in New York.
"We've had a pretty good run in draws of crude-oil inventories," he said.
A similar survey from the American Petroleum Institute, an industry group, is due Tuesday at 4:30 p.m. EDT.
Nymex futures also rose as traders took profits off the lofty spread between Brent and Nymex crude oils, several market participants said. The gap between the two benchmarks hit a record of more than $27 a barrel last week, but has shrunk to less than $22 a barrel in recent days.
This is still high by historical standards. Traditionally, the two crude oils have traded within just a few dollars of each other. But they have spent much of this year trading in wildly different directions, with Brent soaring as high as $127 a barrel due to the removal of Libyan oil exports and supply disruptions in the North Sea, where Brent is sourced.
Nymex crude oil, meanwhile, has been pressured by a transportation bottleneck around Cushing, Okla., its delivery point.
October Brent crude oil on the ICE Futures Europe Exchange recently traded down 33 cents, or 0.3%, to $111.92 a barrel. The contract has traded above $90 a barrel since December.
"You're seeing a fairly significant unwind in the Brent-WTI spread, and it's adding to strength in" the Nymex contract, said Andy Lebow, a vice president at brokerage MF Global in New York.
Meanwhile, the spread between the front-month and second-month contracts in Nymex crude oil shrunk to 7 cents a barrel Tuesday. That is the narrowest since Feb. 17 last year and also signals increasing concerns about tightening supplies.
Crude oil rallied despite the International Energy Agency's cut in its forecast for oil demand for 2011 and 2012. The energy watchdog said Tuesday that the demand cut reflects the weakening global economy, adding that the oil market could be pushed into a small surplus next year if economic conditions weaken enough.
The IEA cut its oil-demand estimate by 200,000 barrels a day for 2011 and 400,000 barrels a day by 2012.
Front-month October reformulated gasoline blendstock, or RBOB, settled up 0.42 cent, or 0.2%, to $2.8424 a gallon. October heating oil settled down 1.14 cents, or 0.4%, to $2.9361 a gallon.