West Texas Intermediate rose for a second day on speculation government data will show crude stockpiles declined a sixth week in the U.S., the world’s biggest oil consumer.
Futures climbed as much as 0.5 percent in New York. Crude inventories fell by 2.75 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration report today. The coldest U.S. weather in almost 20 years also signaled fuel demand may gain. In Iraq, al-Qaeda and allied fighters vowed to resist government forces trying to retake towns Prime Minister Nouri al-Maliki says are under the terrorist group’s sway.
“Markets are likely to trade mostly sideways,” said Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark. “Various issues remain in the geopolitical scene. We set geopolitics as moderately bullish.”
WTI for February delivery advanced as much as 51 cents to $94.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.91 as of 1:26 p.m. London time. The contract rose 0.3 percent to $93.67 yesterday, snapping a five-day losing streak. The volume of all futures traded was about 36 percent below the 100-day average.
Brent for February settlement climbed as much as 60 cents, or 0.6 percent, to $107.95 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a $13.87 premium to WTI. The spread closed at $13.44 yesterday, narrowing for the first time in six days.
Distillate inventories, including heating oil and diesel, increased by 2.25 million barrels in the week ended Jan. 3, according to the median estimate of 10 analysts surveyed by Bloomberg before the report from the EIA, the Energy Department’s statistical arm.
Gasoline stockpiles are projected to have expanded by 2.5 million barrels, the survey shows. Refinery utilization rates probably advanced 0.25 percentage points to an average 92.65 percent of capacity.
The American Petroleum Institute said yesterday that crude inventories shrank by 7.31 million barrels, while distillates gained by 5.17 million barrels and gasoline supplies increased by 5.58 million. The Washington-based group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.
Fighting in Fallujah and the surrounding Anbar province over the past few days is part of an escalating wave of sectarian violence in Iraq, where Maliki’s Shiite Muslim-led government is confronting Sunni Muslim militants. Iraq is the second largest member in the Organization of Petroleum Exporting Countries, pumping 3.2 million barrels a day last month, according to a Bloomberg survey.
“So far, the recent outburst of violence has not spread to the oil producing regions of Iraq,” analysts at Vienna-based JBC Energy GmbH led by Johannes Benigni said in a report. “Political instability in the Middle East-North Africa regions continues to dominate headlines. So far, developments in Libya have had the biggest influence on the oil market.”
Libya, holder of Africa’s biggest oil reserves, is producing 532,982 barrels a day, state-owned Libya News Agency reported, citing figures from the oil ministry. Output has been curbed to about one-third of capacity amid protests for regional autonomy and the seizure of ports by rebel groups.
Cold weather in the U.S. has prompted gas-pipeline operators to reduce flows, fuel terminals to shut loading racks and refineries to cut production. Temperatures in several cities across the eastern half of the nation slid to record lows, with New York’s Central Park hitting 4 degrees Fahrenheit (minus 16 Celsius) yesterday, breaking a mark for the date set in 1896, according to AccuWeather Inc. in State College, Pennsylvania.
“Oil did get a bit of a boost on the weather,” Phil Flynn, a senior analyst at Price Futures Group in Chicago, said in an e-mail today.
Midwest fuel terminals are jammed from increased demand for heating oil and gasoline as drivers keep tanks filled for shopping trips and run engines longer to warm up, said Jeff Lykins, the chief executive officer and president of Lykins Cos., a Milford, Ohio-based marketer that operates in 15 states.