WTI futures remain lower as US refined products rise, Cushing inventories

West Texas Intermediate crude shed some losses but continued to trade lower after a second straight weekly decline in US crude inventories was offset by a much-larger-than-expected rise in both motor gasoline and distillate fuel stockpiles in the seven days to December 6. Further weighing on the market, supplies at Cushing, Oklahoma, jumped to the highest since July.

On the New York Mercantile Exchange, WTI crude for delivery in January traded at $98.01 per barrel at 16:01 GMT, down 0.52% on the day. Prices shifted in a days range between a seven-week high of $98.75 and session low of $97.66 a barrel. The US benchmark rose by 1.4% on Tuesday, the second highest daily gain in more than a month, but trimmed its weekly advance to 0.2% on Wednesday.

Meanwhile on the ICE, Brent futures for settlement in the same month traded at $109.28 per barrel at 16:02 GMT, down 0.10% on the day. Prices shifted in daily range between $109.72 and session low of $108.63 a barrel. The European benchmark added 0.3% on Tuesday but extended its weekly decline to over 2.1% on Wednesday. Brent’s premium to its US counterpart narrowed to $10.87 yesterday, the lowest since November 8 based on closing prices.

Prices remained pressured after the Energy Information Administration reported a larger-than-projected decline in US crude inventories last week as refinery utilization picked up, which however was offset by a sharp rise in both motor gasoline and distillate fuel stockpiles. The government agency said that crude supplies fell by 10.6 million barrels last week, beating analysts projections for a 3.0 million drop, but remained above the upper limit of the average range for this time of the year.

Stockpiles at Cushing, Oklahoma, the biggest U.S. storage hub and delivery point for NYMEX-traded contracts, jumped by 625 000 barrels to 41.2 million, the highest since July 26.

U.S. crude oil imports averaged 6.9 million barrels per day in the seven days through December 6, down by 947 000 barrels form a week earlier. Inbound shipments averaged 7.6 million bpd over the last four weeks, 7.2% below the comparable period in 2012.

Refineries operated at 92.6% of their operable capacity, up from 92.4% a week earlier, but trailing projections for a jump to 92.9%. Both motor gasoline and distillate fuel production picked up last week and averaged 9.0 million and 5.3 million barrels per day, respectively. This was the highest distillate fuel output since 1986.

The report also showed that total motor gasoline inventories rose by 6.7 million barrels last week, sharply exceeding the median estimate of analysts surveyed by Bloomberg News for a 2.0 million increase. At 219.1 million, supplies remained above the upper limit of the average range. Meanwhile, distillate fuel inventories surged by 4.5 million barrels last week to 118.1 million but held in the lower limit of the average range. Analysts expected a moderate 1.18 million increase.

Losses however remained limited as two new pipelines are expected to relieve a supply glut at Cushing, Oklahoma. TransCanada Corp. said it began filling oil into the southern extension of its Keystone pipeline on December 7 and the company is expected to inject 3 million barrels in the coming weeks. The 700 000 bpd portion of the pipeline will relieve a supply glut at Cushing by connecting it to Port Arthur, Texas.

Meanwhile, Royal Dutch Shell advanced on Tuesday in moving a glut of light sweet oil from Texas to Louisiana after it filed tariffs with federal regulators. The pipeline should come online by the end of the year, a company spokesman said.