New York : Oil hit a seven-month high in New York on speculation that US crude stockpiles declined last week while supply losses in Canada and Nigeria whittled away the global excess.

West Texas Intermediate (WTI) futures climbed 1.2%. US crude inventories probably fell by 3.5 million barrels, according to a Bloomberg survey before government data on Wednesday. It would be the first consecutive weekly decrease since September. Wildfires in Canada came to within a kilometer of an Enbridge Inc. oil-sands terminal as warm weather and wind spread the flames.

“The thrust in the oil market is that the supply glut is starting to be eradicated," said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “Falling production and rising demand are expected to wipe out the excess supply that sent us to 12-year lows."

Oil prices have advanced more than 80% 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 increased 59 cents to settle at $48.31 a barrel on the New York Mercantile Exchange (NYMEX). It was the highest close since 9 October. Prices are up 30% this year.

Crude stockpiles

Futures climbed from the settlement after the American Petroleum Institute was said to report US crude supplies slipped 1.14 million barrels last week. WTI traded at $48.48 at 4:39 p.m in New York.

Brent for July settlement rose 31 cents, or 0.6%, to $49.28 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since 3 November. The global benchmark oil ended the session at a 29-cent premium to July WTI.

Commodity companies accounted for four of the six biggest gainers on the Standard & Poor’s 500 Index. The S&P 500 Oil & Gas Exploration and Production Index rose 1.4% to the highest since 2 May.

US crude stockpiles still 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 before Wednesday’s report.

Gasoline futures for June delivery rose 1.7% to $1.6341 a gallon, the highest settlement since 31 August. June diesel climbed 1.9% to $1.4674, the highest close since 10 November.

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." Bloomberg

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