WTI futures retain gains as Cushing supplies extend drop, durable goods orders jump

West Texas Intermediate crude kept its previous gains after government data showed an eight straight weekly decline in supplies at the biggest US storage hub. Nationwide crude oil inventories however jumped for a tenth straight week, largely confirming a private report released on Tuesday. An unexpected rise in US durable goods orders also helped push oil prices up.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $99.85 per barrel at 14:50 GMT, up 0.67% on the day. Prices held in a daily range between $100.13 and $99.10 per 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 down 0.01% on the day at $106.98 per barrel, having ranged between day’s high and low of $107.35 and $106.83 per barrel. The European crude benchmark rose by 0.17% on Tuesday to settle at $106.99 per barrel. Brent narrowed its premium to WTI to $7.13 from Tuesday’s settlement at $7.80, up from $7.21 on Monday.

The Energy Information Administration reported on Wednesday that supplies at Cushing, Oklahoma, the biggest US storage hub and delivery point for NYMEX-traded contracts, fell for an eight consecutive week in the seven days through March 21st, retreating further from last weeks two year low. Supplies at the hub fell by 1.4 million barrels to 28.5 million.

Gains however were limited by a tenth consecutive weekly build up in nationwide crude supplies. The government agency reported that US crude stockpiles rose by 6.6 million barrels last week, sharply exceeding a projected 2.5-million jump, according to the median estimate of 9 analysts surveyed by Bloomberg. At 382.5 million barrels, U.S. crude oil inventories were near the upper limit of the average range for this time of year and were the highest since November.

Refinery utilization jumped by 0.4% to 86.0% last week, rebounding from the lowest level since April that was touched in the week ended March 14th. US crude oil imports rose by 308 000 to 7.6 million bpd from the previous week and averaged 7.3 million bpd over the last four weeks, 3.2% below the same four-week period a year earlier.

Motor gasoline production decreased last week, while distillate fuel output increased, averaging 9.0 million and 4.7 million barrels per day, respectively.

Total motor gasoline inventories fell by 5.1 million barrels, outstripping expectations for a decline of 1.7 million barrels. Distillate fuel inventories, which include diesel and heating oil, rose by 1.6 million barrels, defying analysts projections for a 1.1-million-barrel drop.

Durable goods

WTI crude drew support after the Commerce Departments Census Bureau reported that orders for durable goods rose by 2.2% in February, reflecting solid growth in demand for autos. Analysts expected a moderate rebound to 1% growth from the preceding periods downward revised 1.3% contraction.

However, orders for non-military capital goods excluding aircraft, a gauge for corporate investment, fell by 1.3% from a month earlier, defying economists expectations for a 0.7% jump after Januarys downward revised growth of 0.8%.

Core durable goods orders, which exclude transportation equipment, rose by 0.2% last month, compared to projections for a 0.3% jump after Januarys downward revised 0.9% advance.

The unexpected spike in the general gauge was attributed to strong demand for autos. Bookings for motor vehicles and parts surged 3.6% last month, the strongest performance in a year.

The oil market also continued to gain support 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 Board’s Consumer Confidence index surged to 82.3 this month, sharply exceeding analysts’ expectations for a minor improvement to 78.6. February’s reading was revised up to 78.3 from initially estimated at 78.1.

Supply outages

The oil market was underpinned throughout the day by supply outages in Nigeria and Libya. 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, Iraq’s 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 country’s southern terminals have hovered near a 35-year high so far in March.