WTI futures hold near two-week high on US data, crude inventories

West Texas Intermediate crude held near the highest level in two weeks after a government report showed on Wednesday that supplies at the nations biggest storage hub fell for an eight straight week after the commissioning of a new pipeline, while gasoline demand surged to the highest in three months. The oil market also drew support following another set of upbeat US economic data, which fanned positive sentiment for the US recovery, while investors eyed upcoming GDP and initial jobless claims numbers, due later today.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $100.20 per barrel at 8:13 GMT, down 0.06% on the day. Prices shifted in a daily range between $100.41, near yesterdays two-week high of $100.46, and $100.13 per barrel. The US benchmark jumped by 1.1% on Wednesday, a third daily advance in four, and settled at $100.26 per barrel, the highest close since March 19th.

Meanwhile on the ICE, Brent futures for delivery in the same month stood at $106.90 per barrel, down 0.12% on the day. The contract held between days high and low of $107.06 and $106.77 a barrel. The European crude benchmark added 0.04% on Wednesday and settled at $107.03 per barrel. Brent traded at a premium of $6.70 to WTI after the gap closed at $6.77 on Wednesday, down from $7.80 on Tuesday.

US crude drew support and narrowed its discount to its European counterpart after 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. Supplies at the hub slid 1.33 million barrels to a two-year low of 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. 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 to 217.2 million, outstripping expectations for a decline of 1.7 million barrels, as gasoline demand jumped by 5.8% to a three-month high of 9.002 million bpd. Distillate fuel inventories, which include diesel and heating oil, rose by 1.56 million barrels to 112.4 million, defying analysts’ projections for a 1.1-million-barrel drop.

The oil market drew additional support after the Commerce Department reported a surprisingly large jump in orders for durable goods in the US. Bookings for items meant to last more than three years rose by 2.2% in February, reflecting solid growth in demand for autos. Analysts had expected a moderate rebound to 1% growth from the preceding period’s downward revised 1.3% contraction. This comes after data by the Conference Board showed on Tuesday that US consumer confidence jumped to a six-year high in March.

Market players are now awaiting the release of the final fourth-quarter US GDP numbers, as well as the weekly initial jobless claims figures. The US economy is expected to have grown by 2.7% in the fourth quarter from a year earlier, up from the previous revised reading of 2.4%.

Supply concerns

Also aiding oil prices, nationwide crude output in Libya has fallen to around 170 000 barrels per day as export terminals and oilfields remain blocked amid political turmoil, the state-run National Oil Corporation said. The government is trying to negotiate the reopening of the 340 000-bpd El Sharara oilfield, the countrys second-largest, but has had no success so far.

Meanwhile, oil exports from Nigeria have fallen as well, after Royal Dutch Shell declared force majeure on the countrys Forcados crude shipments due to a pipeline leak caused by oil theft.

Outages however may be partially offset by rising exports from Iran as the Islamic republic exported more crude oil than it is allowed under Western sanctions for at least a fifth month. The Persian Gulf nation can not export more than 1 million barrels of oil per day, according to an interim deal that was struck with six world powers last year, but its shipments in March have averaged 1.3 million bpd, according to tanker trackers.

In the latest events surrounding the Ukraine crisis, the US and the EU agreed on Wednesday to work on preparing possible tougher economic sanctions against Russia, including its energy sector, and also reduce Europes dependence on Russian energy exports. President Obama warned yesterday after a meeting with European leaders that Moscows isolation will deepen, if it continues its current course.