Crude Settles at One-Month High After Modest Inventory Rise

Crude-oil futures settled at a one-month high Wednesday after a report showed U.S. oil stockpiles rose less than expected last week.

Oil inventories increased 200,000 barrels to 395.5 million barrels, the Energy Information Administration said. The rise pushed oil inventories to their highest level since the EIA began keeping weekly records in August 1982, though the gain was less than anticipated by experts and offset by a steep rise in fuel demand.

Light, sweet crude for June delivery settled $1, or 1.1%, higher at $96.62 a barrel on the New York Mercantile Exchange. That is the highest front-month settlement since April 2.

Brent crude on ICE Futures Europe settled 6 cents, or 0.1%, lower at $104.34 a barrel.

"The market got a bit excited that the inventories for crude came in below expectations," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I think it's a lot to do about nothing...we're still building and inventories and are still at record-high levels of crude oil."

Analysts surveyed by Dow Jones Newswires were calling for an inventory rise of 1.7 million barrels.

U.S. oil stockpiles have been rising steadily since the beginning of the year, fueled largely by a steady rise in domestic production. U.S. stockpiles are up roughly 10% year to date.

Market participants said they were surprised by last week's sharp pickup in demand, according to the EIA. The agency's metric for refined fuel use rose 6.5% to 19.1 million barrels a day, although demand for gasoline--the biggest component--was essentially flat.

"Without a doubt the demand number was a little more positive than we've been accustomed to seeing...but guys who are bearish on this market are bearish because of supply," said Pete Donovan, vice president at Vantage Trading, an oil options brokerage, in New York.

Oil futures have been buffeted in recent weeks by persistent signs of weak demand globally and improving global supply, but worries about the escalating civil war in Syria have kept traders on guard for supply disruptions in the Middle East. On Tuesday, unconfirmed reports of explosions in Tehran triggered a 30-cent intraday jump in the price of crude.

On Tuesday, the EIA said Saudi Arabia, the world's biggest oil producer, boosted production 1.8% last month to 9.2 million barrels a day, the highest level since December. The data also showed overall output from members of the Organization of the Petroleum Exporting Countries rose to a five-month high.

Gasoline stockpiles last week fell 900,000 barrels, according to the EIA. Distillate stocks, including heating oil and diesel, rose 1.8 million barrels. Refinery utilization rose 2.6 percentage points to 87% of capacity.

Analysts had expected gasoline stockpiles to fall 300,000 barrels, while stocks of distillates were seen rising by 400,000 barrels. Refiners were expected to increase operations by 0.4 percentage point to 84.8% of capacity.

Oil inventories at the key trading hub of Cushing, Okla., fell 700,000 barrels last week to 49.1 million barrels. A recent decline in Cushing stockpiles has helped to narrow the discount of Nymex crude versus global benchmarks like Brent crude.

The Nymex crude's discount to Brent crude recently neared $7.72 a barrel, its lowest level since January 2011.

Front-month June reformulated gasoline blendstock, or RBOB, settled 2.04 cents, or 0.7%, higher at $2.8538 a gallon. June heating oil settled 1.30 cents, or 0.4%, lower at $2.9147 a gallon.

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Crude Settles at One-Month High After Modest Inventory Rise

Crude-oil futures settled at a one-month high Wednesday after a report showed U.S. oil stockpiles rose less than expected last week.

Oil inventories increased 200,000 barrels to 395.5 million barrels, the Energy Information Administration said. The rise pushed oil inventories to their highest level since the EIA began keeping weekly records in August 1982, though the gain was less than anticipated by experts and offset by a steep rise in fuel demand.

Light, sweet crude for June delivery settled $1, or 1.1%, higher at $96.62 a barrel on the New York Mercantile Exchange. That is the highest front-month settlement since April 2.

Brent crude on ICE Futures Europe settled 6 cents, or 0.1%, lower at $104.34 a barrel.

"The market got a bit excited that the inventories for crude came in below expectations," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I think it's a lot to do about nothing...we're still building and inventories and are still at record-high levels of crude oil."

Analysts surveyed by Dow Jones Newswires were calling for an inventory rise of 1.7 million barrels.

U.S. oil stockpiles have been rising steadily since the beginning of the year, fueled largely by a steady rise in domestic production. U.S. stockpiles are up roughly 10% year to date.

Market participants said they were surprised by last week's sharp pickup in demand, according to the EIA. The agency's metric for refined fuel use rose 6.5% to 19.1 million barrels a day, although demand for gasoline--the biggest component--was essentially flat.

"Without a doubt the demand number was a little more positive than we've been accustomed to seeing...but guys who are bearish on this market are bearish because of supply," said Pete Donovan, vice president at Vantage Trading, an oil options brokerage, in New York.

Oil futures have been buffeted in recent weeks by persistent signs of weak demand globally and improving global supply, but worries about the escalating civil war in Syria have kept traders on guard for supply disruptions in the Middle East. On Tuesday, unconfirmed reports of explosions in Tehran triggered a 30-cent intraday jump in the price of crude.

On Tuesday, the EIA said Saudi Arabia, the world's biggest oil producer, boosted production 1.8% last month to 9.2 million barrels a day, the highest level since December. The data also showed overall output from members of the Organization of the Petroleum Exporting Countries rose to a five-month high.

Gasoline stockpiles last week fell 900,000 barrels, according to the EIA. Distillate stocks, including heating oil and diesel, rose 1.8 million barrels. Refinery utilization rose 2.6 percentage points to 87% of capacity.

Analysts had expected gasoline stockpiles to fall 300,000 barrels, while stocks of distillates were seen rising by 400,000 barrels. Refiners were expected to increase operations by 0.4 percentage point to 84.8% of capacity.

Oil inventories at the key trading hub of Cushing, Okla., fell 700,000 barrels last week to 49.1 million barrels. A recent decline in Cushing stockpiles has helped to narrow the discount of Nymex crude versus global benchmarks like Brent crude.

The Nymex crude's discount to Brent crude recently neared $7.72 a barrel, its lowest level since January 2011.

Front-month June reformulated gasoline blendstock, or RBOB, settled 2.04 cents, or 0.7%, higher at $2.8538 a gallon. June heating oil settled 1.30 cents, or 0.4%, lower at $2.9147 a gallon.

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Inventory Data Send Oil Futures to Highest Level in Nearly Two Weeks

Oil futures shot to their highest price in almost two weeks Wednesday, after a closely watched report said gasoline demand rose to its highest level in more than five months.

The weekly report from the Energy Information Administration also showed oil stockpiles last week rose less than expected, while gasoline inventories fell sharply.

Light, sweet crude for June delivery settled up $2.25, or 2.5%, to $91.43 a barrel on the New York Mercantile Exchange, its highest finish since April 11. Brent crude on the ICE futures exchange rose $1.42, or 1.4%, to $101.73 a barrel, its highest settle since April 12.

The EIA said gasoline demand rose 4.4% to 8.75 million barrels a day last week, the highest level since November. Demand was 3% above the year-earlier level, marking the first year-over-year increase in demand since March 8.

"We're in positive territory" year over year, said Gareth Lewis-Davies, analyst at BNP Paribas. "This is not typical of what we've seen."

Traders found a number of other bullish cues in the EIA report. Oil inventories last week rose 900,000 barrels, less than the increase of 1.2 million barrels forecast in a Dow Jones Newswires survey of analysts. Gasoline stockpiles tumbled 3.9 million barrels last week, the EIA reported, while stockpiles of distillates, including heating oil and diesel, rose 100,000 barrels. Refinery utilization fell 2.8 percentage points to 83.5% of capacity.

Analysts had expected gasoline stocks to fall 400,000 barrels, while distillate stocks were projected to rise 300,000 barrels. Refiners were expected to boost operations by 0.3 percentage point.

The reading on gasoline demand was significant because demand for the fuel has been slack in recent years, as high unemployment has kept drivers off the road and efficiency of new cars and trucks continues to rise.

Analysts expect gasoline demand to continue rising in the coming months as the summer driving season kicks in. That should trigger an increased need of crude oil from refiners. European refiners are also expected to exit a period of prolonged maintenance in the coming weeks that could contribute to demand.

U.S. oil inventories remain close to their highest level in 23 years, helped in large part by booming production.

After Wednesday's move, Nymex crude-oil futures are off just 0.4% for the year to date. Brent, the global benchmark, is down 8.4% over the same period.

Front-month May reformulated gasoline blendstock, or RBOB, settled 2.84 cents, or 1%, higher at $2.7474 a gallon. May heating oil settled 2.96 cents, or 1.1%, higher at $2.8413 a gallon.

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Oil Futures Climb to Two-Week High Ahead of Inventory Data

U.S. crude-oil futures ground higher Tuesday, pushing to a two-week high as investors await government data on U.S. oil supplies.

Light, sweet crude for April delivery settled up 48 cents, or 0.5%, at $92.54 a barrel on the New York Mercantile Exchange, the fourth-straight session of gains and the highest settlement since Feb. 27.

Brent crude on the ICE futures exchange fell 57 cents to settle at $109.65 a barrel.

Oil prices continued the bounce from lows near $90 a barrel earlier this month. Analysts and traders said they were looking ahead to Wednesday's release of U.S. oil inventories data for signs on whether the rally can be sustained.

U.S. crude-oil stockpiles are expected to rise by 2.4 million barrels in data due 10:30 a.m. EDT Wednesday from the Energy Information Administration, according to a Dow Jones Newswires survey of analysts. If the estimate is correct, oil inventories will be at the highest level ever for this time of year.

The American Petroleum Institute, an industry group, will release its own data at 4:30 p.m. EDT Tuesday.

Gasoline stocks are seen falling by 1.2 million barrels in the EIA data, and stocks of distillate, which include heating oil and diesel, are seen falling by 1.9 million barrels.

Oil prices have slumped from highs near $98 a barrel earlier this year amid rising domestic supplies. But improving economic data in recent weeks, including Friday's larger-than-anticipated increase in U.S. employment, have helped halt the decline.

"With overall improving economic data, I'd say there is a slight bias higher, but not that much given that inventories are still as high as they are in the U.S," said Kyle Cooper, managing partner at IAF Advisors in Houston. He added that in weekly EIA data, "Crude inventories are probably going to build again, crude production is still high, crude demand is still low."

Some analysts said this week's recovery appeared to be technically driven after U.S. prices failed to make a renewed push below $90 a barrel, which is a key support level on trading charts.

But market watchers added they were still scratching their heads over the rise, as the fundamentals for the global oil market haven't changed and latest assessments may point to steady, rather than higher prices.

OPEC said in its monthly report that non-OPEC output, led by growth in output from U.S. shale-oil fields, will rise by 1 million barrels a day this year.

The EIA forecast in its short-term energy outlook Tuesday that U.S. crude-oil output will top net imports for the first time in more than 17 years this autumn.

News that more of the world's oil supply is in the hands of producers that wouldn't regularly adjust output to support prices, as the Organization of the Petroleum Exporting Countries often does, would be a stabilizing force for global oil prices, analysts said.

April-delivery reformulated gasoline blendstock futures settled 0.22 cent lower at $3.1502 a gallon. April heating oil settled 2.07 cents lower, at $2.9484 a gallon.

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Crude-Oil Futures Settle Down 1.5% on Expectations of Rising Inventory

Crude-oil futures prices posted their biggest decline in a month Wednesday, falling 1.5% to $95.23 a barrel, on expectations of a seasonal drop in demand from U.S. refiners.

The decline in prices came after crude climbed nearly $3 a barrel over the previous four days, culminating with the February light, sweet crude oil futures contract on the New York Mercantile Exchange expiring Tuesday at a four-month high.

Profit-takers ruled the day, cashing in on the recent gains, and the selloff accelerated with late-session news of an operating snag on the key Seaway Pipeline, which carries oil out of the Nymex contract delivery point of Cushing, Okla., to the key Gulf Coast refining region.

Capacity on the line recently tripled to 450,000 barrels a day and helped to drive Nymex prices up by $12 a barrel since early December, on hopes that record-high stocks at Cushing would decline and the oil would fetch a higher price in the Gulf.

But operators of the line said "unforeseen constraints" have limited the flow to 175,000 barrels a day for an unspecified period.

"The key is the duration," said Andrew Lebow, senior vice president of energy futures at Jefferies Bache in New York.

The potential for U.S. crudes now bottlenecked at Cushing to compete with imports in the Gulf has lifted Nymex crude at the expense of North Sea Brent, the pricing bases for much foreign crude sent to the U.S.

"Every bank in the world has been advising buy WTI-sell Brent," Mr. Lebow said, referring to the U.S. benchmark, West Texas Intermediate crude oil.

Nymex crude oil for March delivery settled $1.45 a barrel lower, at $95.23 a barrel, the lowest price in a week. The one-day drop was the most since Dec. 21. ICE March Brent crude oil rose 38 cents, to $112.80 a barrel, the highest price since Oct. 17. Brent's premium to the U.S. benchmark of $17.57 a barrel was the highest since Jan. 14.

Mark Waggoner, president of Excel Futures in Bend, Ore., called crude-oil futures "extremely overbought" and said he expects a pullback in the next few weeks to $90 a barrel, where he would be a buyer.

Analysts surveyed by Dow Jones Newswires expect upcoming government oil-inventory data to show crude-oil stocks fell 1.7 million barrels last week, while refineries trimmed operations by 0.4 percentage point, to 87.5% of capacity. Gasoline stocks are expected to show a 900,000-barrel rise, while distillate stocks (diesel/heating oil) are expected to drop by 100,000 barrels.

The data, for the week ended Jan. 18, are set for release by the Energy Information Administration at 11 a.m. EST Thursday, a day later than usual due to the government holiday celebrated Monday.

U.S. refiners have been processing crude at a rate of nearly 15.2 million barrels a day in the first two weeks of January, while the EIA has projected a monthly average of 14.5 million barrels a day, the lowest in a year.

Rising U.S. crude-oil output, now at a 20-year high above 7 million barrels a day, has plumped up crude-oil inventories, which stand 8.8% above the five-year average level, EIA data show. Last week, crude-oil stocks were at a 30-year high for the week. Inventories at Cushing have climbed nearly 14% since early December to record levels near 52 million barrels.

Gasoline stocks last week were the highest for this time of year on records beginning in 1990 and have gained 17% in the past eight weeks. But in the New York Harbor region, the delivery point for the contract, inventories were the lowest on record for this time of year are more than 14% below the five-year average.

February-delivery reformulated gasoline blendstock futures rose for a fifth straight session, up 0.39 cent to $2.8338 a gallon, the highest settlement since Oct. 16.

Gene McGillian, broker and analyst at Tradition Energy, said the rise of more than 12 cents in RBOB futures in the past week, reflects expectation that high inventories will tighten when refinery operations slow. "We're likely to see a more extensive [maintenance] season than maybe some people anticipated," he said.

Nymex heating oil futures settled 0.99 cent higher, at $3.0781 a gallon. The fourth straight rise put prices at the highest level since Oct. 30.

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