Both West Texas Intermediate and Brent crude benchmarks swung between gains and losses, with WTI touching a one-week high in early European trading, after government data showed yesterday a seventh consecutive drop in Cushing supplies, while stockpiles of refined products also fell. Albeit eroded, oil’s geopolitical premium stemming from the tension in Ukraine kept prices underpinned. Meanwhile, natural gas futures declined ahead of a government report later today, which may show an inventory drop that is a third the size of the previous report.
On the New York Mercantile Exchange, WTI crude for delivery in May traded at $98.88 per barrel at 10:24 GMT, down 0.3% on the day. Prices shifted in a daily range between a one-week high of $99.45 and $98.82 a barrel. US crude added 0.3% on Wednesday and settled at $99.17.
Meanwhile on the ICE, Brent futures for settlement in the same month were down 0.15% at $105.69 a barrel, having varied in a daily range between $106.23 and $105.60 a barrel. The European crude benchmark lost 0.9% on Wednesday and closed at $105.85 a barrel. Brent traded at a premium to its US counterpart of $6.70. The gap narrowed on Wednesday to close at $6.68, down from Tuesday’s settlement at $7.91.
US crude shrank its discount to Brent on Wednesday after the Energy Information Administration reported a seventh consecutive drop in stockpiles at Cushing, Oklahoma, the biggest US storage hub and delivery point for NYMEX-traded contracts. Inventories at the hub slid by 989 000 barrels last week to 29.8 million, the lowest level since January 2012.
The report also showed that total motor gasoline inventories fell by 1.5 million barrels in the week ended March 14th to 222.3 million. Meanwhile, distillate fuel stockpiles declined by 3.1 million barrels to 110.8 million, the lowest since May 2008.
Meanwhile, on the New York Mercantile Exchange, natural gas for delivery in April traded at $4.404 per million British thermal units at 10:26 GMT, down 1.8% on the day. Prices held in a daily range between $4.473 and $4.401 per mBtu. The contract fell to a seven-week low of $4.341 on March 14 and settled last week 4.4% lower.
Last Thursday, the Energy Information Administration reported that US natural gas inventories fell by 195 billion cubic feet in the seven days through March 7th, less than analysts’ median forecast of a 199 cubic feet drop and compared to a withdrawal of 145 billion cubic feet the same week a year ago.
Total gas held in US underground storage hubs fell to a 10-year seasonal low of 1.001 trillion cubic feet in the seven days through March 7th. US gas stockpiles were 48.9% below last year’s amount of 1.959 trillion cubic feet during the comparable week. The deficit to the five-year average widened to a record 46.2%, up from 38.8% a week earlier.
The government report will probably show a stockpile decline that’s a third the size of the previous report, according to analyst estimates compiled by Bloomberg.
The EIA is scheduled to release its weekly US gas storage report at 14:30 GMT today.
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