More consumer pain as oil hits 6-month high. Falling stockpiles ease glut.

By Ben Sharples

(Bloomberg) — Oil advanced to a six-month high before U.S. government data forecast to show crude stockpiles dropped for a second week, easing a glut.

oil_gasFutures climbed as much as 1.2 percent in New York after rising 3.3 percent Monday. Inventories are seen falling by 3.5 million barrels, the first two-week decrease since September, according to a Bloomberg survey before Energy Information Administration data Wednesday. Wildfires raging across Canada for more than two weeks have come to within a kilometer of an Enbridge Inc. oil-sands transportation terminal as warm weather and wind spread the flames.

Oil has advanced more than 80 percent since slumping to the lowest in 12 years earlier this year on signs the global glut will ease as U.S. production declines. The market moved into a deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to Goldman Sachs Group Inc.

“A range of factors have come together to produce a sharp boost in prices,” Angus Nicholson, an analyst at IG Ltd. in Melbourne, said by phone. “We’ve had major disruptions in May with Canada and Nigeria and a far bigger increase in demand from places such as India. It’s feasible that oil could rise above $50.”

Read also: Cheap oil: The winners and losers.

West Texas Intermediate for June delivery rose as much as 56 cents to $48.28 a barrel on the New York Mercantile Exchange, the highest since Nov. 4 on an intraday basis. The contract was at $48.22 at 12:21 p.m. Hong Kong time. Prices gained $1.51 to $47.72 on Monday, the highest close since Nov. 3. Total volume traded was about 5 percent below the 100-day average.

U.S. Stockpiles

Brent for July settlement added as much as 33 cents, or 0.7 percent, to $49.30 a barrel on the London-based ICE Futures Europe exchange. The contract increased $1.14, or 2.4 percent, to $48.97 on Monday. The global benchmark crude was at a premium of 37 cents to WTI for July.

U.S. crude inventories dropped by 3.4 million barrels to 540 million barrels through May 6, according to EIA data. Stockpiles are at the highest level in more than eight decades. Gasoline supplies probably declined by 1.25 million barrels last week, according to the median estimate in the Bloomberg survey.

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