WTI futures rebound from 1-week low on US weather outlook, supply worries

West Texas Intermediate crude recovered from Fridays one-week low on forecasts for cold weather to return to the US Midwest and Northeast this week, just after temperatures had recently moderated. Escalating tension in OPEC member Venezuela, a further reduction in Libyas output and civil unrest in South Sudan also lent support to the oil complex.

On the New York Mercantile Exchange, WTI futures for settlement in April rose by 0.12% to $102.32 by 7:49 GMT and held in a daily range between $102.70 and $102.25 per barrel. The US benchmark fell by 0.5% on Friday after it slid 0.1% the previous day but managed to settle the week 2.1% higher, marking a sixth straight weekly advance, the longest winning streak in a year.

Meanwhile on the ICE, Brent crude for delivery in the same month was mostly unchanged at $109.89 a barrel. Prices varied between days high and low of $110.24 and $109.65 a barrel respectively. The European benchmark fell by 0.4% on Friday but rose by 0.8% on weekly basis, and traded at a premium of $7.57 to its US counterpart, down from Fridays settle at $7.65.

Oil pared its weekly advance on Friday after colder-than-usual weather across the US, which had previously been stoking heating demand, gave way to milder temperatures. Readings in the US Northeast rose to as much as 50 degrees Fahrenheit, pushing down diesel futures by 3%.

However, the market was once again on the rise on Monday amid expectations for the return of cold arctic air to the US Midwest and Northeast this week, AccuWeather.com reported, which should renew strong heating demand. The National Weather Service warned that two storms threaten to bring snow to the US Northeast this week, carrying over freezing air. US distillate fuel inventories fell for a sixth straight week to the lowest level since November in the seven days to February 14th, data by the Energy Information Administration showed.

Also fanning positive sentiment, supplies at Cushing, Oklahoma, the biggest US storage hub and delivery point for NYMEX-traded contracts, declined by 1.7 million barrels in the week ended February 14th to 35.9 million, the lowest level since October, as the southern leg of TransCanada’s Keystone XL pipeline began delivering oil from the hub to the Gulf Coast in January. Nationwide crude inventories increased by 973 000 barrels, compared to analysts’ forecasts for a 2.25-million barrels build.

According to data by the US Commodity Futures Trading Commission, hedge funds and other speculative traders raised their net-long positions on WTI by 25 836 futures and options combined to 331 857 in the week ended February 18th, the highest level since July.

A brighter outlook for global economy growth also kept prices underpinned as the Group of 20 economies pledged to create tens of millions of jobs in the next five years, while generating an additional output of $2 trillion.

Supply disruptions

Market players are also keeping a close watch on escalating tension in OPEC member Venezuela as the countrys oil minister said on Friday he may halt fuel deliveries to areas with anti-government protests, which have shaken the nation and spurred supply concerns.

Meanwhile in South Sudan, Malakal, the capital city of the main oil-producing Upper Nile region, remained divided between the army and rebels. An official announced last week that nationwide output has fallen by a third to 170 000 bpd even before the strike in Malakal.

In Libya, production fell further from the recent 370 000 barrels per day, declining to 230 000 bpd as new protests shut the western El Sharara field on Sunday.