WTI Trades Near Six-Week High on U.S. Fuel InventoriesGrant Smith
West Texas Intermediate crude traded near the highest price in six weeks on forecasts that U.S. distillate stockpiles shrank as colder weather boosted demand for heating fuels.
Futures rose as much as 0.4 percent in New York after gaining for a fifth day yesterday. Distillate inventories, including heating oil and diesel, probably declined by 2.13 million barrels last week, according to a Bloomberg News survey of analysts before an Energy Information Administration report tomorrow. A winter storm may spread snow and sleet across the country’s south, the U.S. National Weather Service said.
“Increased heating oil demand generated by the unusually cold winter in the U.S. has tightened the supply of middle distillate noticeably on both sides of the Atlantic,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.
WTI for March delivery advanced as much as 43 cents to $100.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.26 as of 12:56 p.m. London time. The contract gained 18 cents to $100.06 yesterday, the highest close since Dec. 27. The volume of all futures traded was about 31 percent below the 100-day average. Prices have increased 1.9 percent this year.
Brent for March settlement gained 28 cents to $108.91 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $8.65 to WTI on ICE. The spread narrowed for the first time in four days yesterday to close at $8.57.
Brent may decline during the next quarter amid seasonal maintenance at refineries and increasing crude supplies, Adam Longson, an analyst at Morgan Stanley in New York, said in a report yesterday.
WTI advanced the past four weeks, the longest rising streak since July, as arctic weather boosted energy demand in the U.S., the world’s biggest oil consumer. Georgia’s governor declared a state of emergency for 45 counties while Atlanta shut public schools through tomorrow.
“There’s been a lot of finished product consumed,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “The seasonal factor is at play. Investors are also looking at the demand potential in the U.S.”
The south may get as much as 3 inches (7.6 centimeters) of snow and ice as the storm moves from Texas to the Atlantic, the National Weather Service said yesterday.
Distillate stockpiles are forecast to have decreased for a fifth week, according to the Bloomberg survey. Supplies dropped by 2.36 million barrels to 113.8 million in the seven days through Jan. 31, the lowest level for that time of year since 2003, EIA data show.
Crude inventories expanded by 2.6 million barrels in the week ended Feb. 7, according to the median estimate of eight analysts surveyed. Gasoline supplies are projected to have slid by 250,000 barrels.
WTI’s rally may trigger a bullish technical formation known as a double-bottom reversal, according to data compiled by Bloomberg. Futures rebounded from about $92 a barrel in late November and mid-January, forming two troughs that flank a settlement high of $100.32 on Dec. 27. This level represents chart resistance and is where prices may extend gains.