Oil Falls First Time in Nine Days as U.S. Crude Supplies Climb

  • U.S. crude stockpiles rose 614,000 barrels last week: EIA
  • Gasoline, diesel futures close at highest levels since 2015

Dicker: 2017 Looks to Be One of Best Oil Years

Oil fell for the first time in nine sessions in New York after a government report showed U.S. crude stockpiles increased for a second week.

Crude stockpiles rose 614,000 barrels last week, according to the Energy Information Administration. A 1.5 million barrel decline was forecast by analysts surveyed by Bloomberg, and a 4.2 million barrel increase was reported Wednesday by the industry-funded American Petroleum Institute. Gasoline and diesel futures climbed to the highest in more than a year after stockpiles fell. Refiners along the Gulf Coast try to reduce crude inventories in December to lower their tax bills.

"The fact that crude oil supplies were able to build as refineries operated at high levels and at a time of year when tax concerns usually lower supplies is bearish," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone.

Oil has traded near or above $50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov. 30 to cut output for the first time in eight years. Non-OPEC producers including Russia will also trim supply. Iraq is committed to reducing output by as much as 210,000 barrels a day from January, Oil Minister Jabbar al-Luaibi said in an interview with Kuwait’s state-run news agency Kuna.

West Texas Intermediate for February delivery dropped 29 cents, or 0.5 percent, to settle at $53.77 a barrel on the New York Mercantile Exchange. The contract gained 16 cents to $54.06 on Wednesday, the highest close in almost 18 months. Total volume traded was about 36 percent below the 100-day average at 2:55 p.m. Prices are up 45 percent this year.

Cushing Increase

Brent for February settlement slipped 8 cents to expire at $56.14 a barrel on the London-based ICE Futures Europe exchange. Prices are up 51 percent this year. The global benchmark crude ended the session at a $2.37 premium to WTI. The more-active March contract declined 11 cents to $56.85.

Nationwide inventories increased to 486.1 million in the week ended Dec. 23, and are at the highest seasonal level since the EIA began tracking weekly data in 1982. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI, rose by 172,000 barrels to 66.4 million, the EIA said.

"The Brent-WTI spread is near $2.50, which is very wide," Thomas Finlon, director of Energy Analytics Group in Wellington, Florida, said by telephone. "This shows that there’s too much crude at Cushing."

Gasoline supplies slipped 1.59 million barrels last week, while stockpiles of distillate fuel, which includes diesel and heating oil, fell 1.88 million. Overall fuel demand dropped 5.8 percent to 20.2 million barrels a day last week.

"The product draws are bullish but the weak demand numbers are a challenge," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.

Gasoline futures for January delivery climbed 0.4 percent to $1.682 a gallon, the highest close since August 2015. The February gasoline crack spread, a rough measure of the profit from refining crude into the fuel, climbed as much as 6.3 percent to to $17.033 a barrel.

Diesel for February delivery rose 0.3 percent to $1.7037, the highest settlement since July 2015.

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