Feb. 21 (Bloomberg) -- West Texas Intermediate crude headed for a sixth weekly gain as freezing weather in the U.S. bolstered demand for heating fuels in the world’s biggest oil consumer. Brent is also poised to advance for the week.
Futures were little changed in New York and up 2.4 percent this week. Distillate stockpiles, including heating oil and diesel, declined by 339,000 barrels to 112.7 million in the seven days through Feb. 14, the Energy Information Administration reported yesterday. South Sudan is trying to evacuate foreign oil workers from its Upper Nile region after fighting erupted between government forces and rebel fighters.
“Following somewhat milder temperatures in the U.S. of late, temperatures are forecast to plummet again next week,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “After that the weather should normalize. Based on fundamentals, prices are too high.”
WTI for April delivery dropped 23 cents to $102.52 a barrel as of 1:22 p.m. London time in electronic trading on the New York Mercantile Exchange. The March contract expired yesterday after losing 39 cents to $102.92. The volume of all futures traded was about 37 percent below the 100-day average. Prices have increased 4 percent this year.
Brent for April settlement traded 25 cents lower at $110.05 a barrel on the London-based ICE Futures Europe exchange. Prices are up 0.9 percent this week. The European benchmark crude was at a premium of $7.53 to WTI on ICE, little changed from $7.55 yesterday.
The state government of South Sudan’s Upper Nile region instructed oil companies to halt production at the Gumri and Adar oil fields “because of security precautions,” Upper Nile Mining and Petroleum Minister Francis Ayul said in a phone interview today.
South Sudan, which gained independence from Sudan in July 2011, has sub-Saharan Africa’s third-biggest oil reserves, according to BP Plc data.
WTI is set for the longest weekly rally in a year as cold weather boosted energy demand and supplies shrank at Cushing, the delivery point for New York-traded contracts. TransCanada Corp. began moving crude from the storage hub to Texas on the southern portion of its Keystone XL pipeline in January.
“We’re getting colder-than-usual weather in the U.S.,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney who predicts investors may sell WTI at about $103 a barrel. “We have also technical momentum now after breaking through resistance at about $100.50.”
Cushing crude stockpiles slid by 1.7 million barrels last week to 35.9 million, said the EIA, the Energy Department’s statistical arm. That’s the lowest level since October.
Temperatures from the U.S. Midwest to the Northeast will be below normal from Feb. 25 to March 5, according to the National Weather Service’s Climate Prediction Center. Ultra-low-sulfur diesel for March delivery, a proxy for heating oil, rose 1 percent to $3.1777 a gallon in New York yesterday, the highest settlement since Jan. 31. It was $3.1625 today.
WTI may fall next week as stockpiles expand, a separate Bloomberg poll shows. Twenty-three of 28 analysts and traders, or 82 percent, said futures will decrease through Feb. 28. Four respondents expected prices to gain while one forecast there will be little change.
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