Oil on a 7-mnth high

Oil hit a seven-month high on speculation that US crude stockpiles declined last week while supply losses in Canada and Nigeria whittled away the global excess. West Texas Intermediate climbed as much as 1.5 per cent in New York. US crude inventories probably fell by 3.3 million barrels, according to a Bloomberg survey before government data Wednesday. It would be the first consecutive weekly decrease since September. Wildfires in Canada came to within a kilometre of an Enbridge oil-sands terminal as warm weather and wind spread the flames.

Oil prices have advanced more than 80 per cent from a 12-year low earlier this year on signs the global glut will ease as US production declines. The market has moved into an output deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to Goldman Sachs Group Inc.

WTI for June delivery rose 46 cents, or 1 per cent, to $48.18 a barrel at 10:58 am on the New York Mercantile Exchange. Futures touched $48.42, the highest intraday since October 13. Prices advanced 3.3 per cent to $47.72 on Monday, the highest close since November 3. Brent for July settlement increased 42 cents, or 0.9 per cent, to $49.39 a barrel on the London-based ICE Futures Europe exchange.

The contract touched $49.47 for a second day, the highest since November4. The global benchmark crude was at a 49-cent premium to July WTI.

US crude inventories slipped by 3.4 million barrels to 540 million barrels in the week ended May 6, according to Energy Information Administration data.

Stockpiles remain near the highest level in more than eight decades. Gasoline supplies and stockpiles of distillate fuel probably declined by 1 million barrels each last week, according to the Bloomberg survey.

Gasoline futures for June delivery rose 1.2 percent to $1.6247 a gallon. June diesel climbed 1.9 percent to $1.4669 after touching $1.4684, the highest since Nov. 11.

Canadian Fires
The Alberta fires have reduced output by about 1.2 million barrels a day, according to new estimates from the Conference Board of Canada. The research group says 14 days of production cuts represent an economic hit of about C$985 million ($761 million) to the provincial economy.

"The longer these outages last, the quicker the pace of rebalancing," said Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London. "Persistent crude stock draws will begin by the end of the second quarter."