Oil Futures Gain Ahead of Inventory Report
WASHINGTON – Oil futures held above $100 a barrel Wednesday ahead of a weekly government storage report, which is expected to show continued strong demand for petroleum products.
Light, sweet crude for March delivery rose $1.22, or 1.2%, to $101.16 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe gained 70 cents, or 0.6%, to $109.38 a barrel.
The U.S. Energy Information is set to release its weekly storage data for the week ended Feb. 7 at 10:30 a.m. EST.
Analysts are expecting the survey to show that crude-oil supplies rose by 2.5 million barrels last week, while gasoline stockpiles fell by 200,000 barrels and stocks of distillates, including heating oil and diesel fuel, dropped by 2.1 million barrels, according to a Wall Street Journal survey.
An unusually cold winter has boosted demand for heating oil, shrinking distillate stockpiles to multiyear lows for this time of year.
Market watchers are also looking for the report to show that stockpiles in Cushing, Okla., fell as a new pipeline allowed more oil to be moved out of the storage hub to refineries along the Gulf Coast. Because the Nymex contract is priced in Cushing, a decrease in Cushing stockpiles could boost the benchmark U.S. price.
The American Petroleum Institute, a trade group, said late Tuesday that its own data showed that inventories in Cushing fell by 2.5 million barrels last week, while overall crude-oil supplies rose by 2.1 million barrels. The front-month oil contract posted further price gains after the API report was released.
However, oil futures have risen more than 10% since hitting a recent low in early January, prompting some traders to question how much further prices can climb.
“We’re looking to see some sort of pullback here,” said Bill Baruch, senior market strategist with Chicago-based futures brokerage iiTrader. “A massive build in crude or distillates will help the market push lower.”
Meanwhile, Brent futures, the international benchmark, rose on news that Chinese imports of crude oil hit an all-time monthly high in January, according to preliminary customs data released Wednesday.
China is the number-two oil-consuming nation. Shipments of crude reached the equivalent of 6.66 million barrels a day in January, 12% above the year-ago level.
“The figures point to surprisingly robust oil demand in China, which should allay concerns that the dynamism of demand is weakening,” said Commerzbank in a note Wednesday. However, the bank noted that imports could have increased ahead of the Lunar New Year, when driving demand is especially strong.
Front-month March reformulated gasoline blendstock, or RBOB, recently rose 2.95 cents, or 1.1%, to $2.7821 a gallon. March diesel rose 2.12 cents, or 0.7%, to $3.0493 a gallon.
– WALLSTREET JOURNAL