Crude Gains First Time This Week After Gasoline Supplies Drop

Updated on
  • Motor fuel sotckpiles declined by 1.98 million barrels
  • Surprise draw, weaker dollar helped push crude higher

OPEC's Control of the Oil Market Is Running on Fumes

Oil rose for the first time this week as a surprise decline in U.S. gasoline supplies helped ease concerns about lackluster demand.

Futures closed 0.4 percent higher in New York. American gasoline inventories fell by 1.98 million barrels last week, the first draw since early November, the Energy Information Administration said. While crude stockpiles rose the most in almost a year, that came after a record streak of declines. Plus, increases were on the horizon due to seasonal refinery maintenance.

“People had expected a crude build,” Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston, said by telephone. At the same time, “gasoline showed a pretty healthy decline, which alleviated some of the fears about demand being weak.”

Contributing to the expansion in stored supplies of crude was a 41,000-barrel increase in domestic daily production last week, as well as the biggest tranche of imported oil since August, the government report showed.

The streak of crude withdrawals “had to be broken at some point,” Rob Thummel, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. “The positive surprise was the gasoline draw. That’s helping to support prices a little bit.”

Futures slumped earlier as booming production from shale fields stirs fears that a supply glut may start to form again.

A separate EIA report showed that production in November surged above 10 million barrels a day for the first time in four decades. Adding to further supply concerns is rising output from the Organization of Petroleum Exporting Countries in January, according to consultant JBC Energy.

Click here for a story on the latest milestone for U.S. oil production

West Texas Intermediate for March delivery rose 23 cents to settle at $64.73 a barrel on the New York Mercantile Exchange, after dropping as much as 1.3 percent.

Brent for March settlement, which expires Wednesday, added 3 cents to end the session at $69.05 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $4.32 to WTI. The more-active April contract rose 37 cents to settle at $68.89.

Front-month gasoline futures, which expire Wednesday, added 0.6 percent to $1.9075 a gallon.

A weakening of the dollar also gave oil a boost as that typically makes commodities more appealing to investors. The Bloomberg Dollar Spot Index, a gauge of the currency against 10 major peers, dropped as much as 0.5 percent.

Oil-market news:

  • OPEC and allied producers “are looking now at a long-term cooperation mechanism that will be permanent,” Kuwait Oil Minister Bakheet Al-Rashidi told reporters in Kuwait City.
  • The biggest U.S. refiners probably boosted profitability during the final three months of 2017.
  • BHP Billiton Ltd., seeking to accelerate the sale of its U.S. shale unit, is prepared to offer the assets in as many as seven packages, including three in the prized Permian Basin, according to people with knowledge of the producer’s plans.
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