Crude oil futures rise on supply outages, upbeat US data, EIA report in focus

Both West Texas Intermediate and Brent crude benchmarks edged higher in early European trading on Wednesday, supported by supply disruptions in Nigeria and Libya, as well as strong data from the US on Tuesday which bolstered the top consumers economic outlook. Gains however were capped after a private report showed a tenth consecutive weekly build up in US crude inventories, which is expected to be confirmed by government data later in the day. Easing worries over Ukraine also pressured the oil market.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $99.23 per barrel at 7:34 GMT, up 0.04% on the day. Prices shifted in a daily range between $99.10 and $99.54 a barrel. The contract lost 0.4% on Tuesday, its first decline in three days, and settled at $99.19 per barrel, the lowest since March 17th.

Meanwhile on the ICE, Brent futures for settlement in the same month were up 0.10% on the day at $107.10 per barrel, having ranged between days high and low of $106.83 and $107.30 per barrel. The European crude benchmark rose by 0.17% on Tuesday to settle at $106.99 per barrel. Brent widened its premium to WTI to $7.87 from Tuesdays settlement at $7.80, up from $7.21 on Monday.

Oil prices drew support after Royal Dutch Shell declared force majeure on exports of Forcados crude from Nigeria following a pipeline leak that was caused by oil theft. The company did not provide a timeline on when exports will resume, but that should happen as soon as possible.

Meanwhile, the Libyan state-run National Oil Corporation said on Tuesday that nationwide output has fallen by a further 80 000 barrels per day to around 150 000 bpd due to the closure of the El Feel oilfield as the pipeline to the Mellitah port was shut. The African country produced a total of 1.4 million barrels of oil per day last summer, before rebel groups and protesters cut most of the country’s capacity.

According to data compiled by Reuters, Iraqs oil shipments are expected to have fallen to 2.5 million bpd this month from 2.8 million bpd in February. However, exports from the countrys southern terminals have hovered near a 35-year high so far in March.

The oil market, and especially WTI crude, were also well supported by the rise of US consumer confidence to a six-year high in March amid improved optimism about the economy after the recent harsh winter weather, and house prices increased solidly.

The Conference Boards Consumer Confidence index surged to 82.3 this month, sharply exceeding analysts expectations for a minor improvement to 78.6. Februarys reading was revised up to 78.3 from initially estimated at 78.1.

Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc., said for Bloomberg: “Signs of spring might be evident and might be getting people a little more optimistic that the future is going to be better. As these weather effects dissipate and we get payback, you’ll see confidence improve even more.”

The Houston Ship Channel, which was closed after an oil barge spill shut the waterway, gradually reopened yesterday after being closed for four days, which had curbed production at the country’s second-largest refinery.

US crude inventories

Oils gains were limited after the industry-funded American Petroleum Institute reported a tenth consecutive weekly build up in US crude inventories. According to the trade association, US crude supplies jumped by 6.28 million barrels last week, while distillate fuel inventories rose by 267 000 barrels, defying projections for a drop. Motor gasoline stockpiles slid by 2.84 million barrels.

However, API’s data is deemed less popular than EIA’s figures as they are based on voluntary information provided by operators of pipelines, refineries and bulk terminals, while the government requires reports to be filed with the EIA.

According to a Bloomberg survey of nine analysts before the release of EIA’s statistics later today, US crude supplies probably rose by 2.5 million barrels in the seven days through March 21st. Motor gasoline stockpiles are expected to have fallen by 1.7 million barrels, while distillate fuel inventories, which include diesel and heating oil, have likely declined by 1.1 million barrels.

The oil complex was also pressured after US President Barack Obama and his allies agreed to abstain from imposing tougher economic sanctions against Russia, if Moscow limits its territorial appetite to Crimea, easing concerns over exports reduction from the worlds top oil producer.