WTI futures hold near 1-month high on US fuel demand, Fed minutes

West Texas Intermediate crude fell in early European trading on Thursday but held near the highest level in a month after a spike in US gasoline demand, coupled with persisting tension in eastern Ukraine. Wednesdays Fed minutes, which suggested policy makers will be cautious when raising interest rates also helped push prices up. The oil market was however pressured by weak trade data from China, another sign of an economic slowdown in the worlds second-biggest consumer.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $103.38 per barrel at 6:23 GMT, down 0.22% on the day. Prices shifted in a daily range between $103.20 and $103.45 a barrel, near yesterdays one-month high of $103.77. The contract jumped 1% on Wednesday and settled the session at $103.60, the highest close since March 3rd.

Meanwhile on the ICE, Brent futures for settlement in the same month were down 0.31% at $107.64 per barrel, having varied in a daily range between $107.46 and $107.92 per barrel. The European crude benchmark added 0.3% on Wednesday and settled at $107.98, having touched a one-week high of $108.14. Brents premium to its US counterpart shrank to $4.26, down from Wednesdays settlement at $4.38, which was the narrowest since September 19th.

Oil prices were pressured on Thursday after downbeat trade data from China added to previous signs of economic slowdown in the worlds second-biggest oil consumer.

Chinas General Administration of Customs reported today that the countrys exports unexpectedly contracted by 6.6% in March after a 18.1% decline in February, compared to analysts expectations for a 4.0% growth. Meanwhile, the Asian nations inbound shipments slumped 11.3%, defying projections for a 2.4% gain after Februarys 10.1% increase. As a result, Chinas trade balance marked a surplus of $7.71 billion after it had posted a $22.98-billion deficit the previous month.

A larger-than-expected build in US crude oil inventories also helped push prices lower, but losses were checked by a spike in US gasoline demand, a sign of solid consumption ahead of the summer season.

Nationwide crude stockpiles jumped by 4.0 million barrels in the seven days through April 4th to a four-month high of 384.1 million barrels, the Energy Information Administration reported, compared to expectations for a 750 000-barrel jump.

Meanwhile, US refiners supplied 8.81 billion barrels of gasoline per day in the four weeks through April 4th, the highest since January 3rd. Total motor gasoline supplies fell by 5.2 million barrels last week, sharply exceeding analysts’ projections for a 1-million decline. Distillate fuel inventories, which include heating oil and diesel, jumped by 0.2 million barrels, compared to projections to remain unchanged.

Refineries operated at 87.5% of their operable capacity, down 0.2% from the preceding week. Both gasoline and distillate fuel production jumped, averaging 9.4 million and 4.8 million barrels per day, respectively.

The oil markets also drew support after minutes of FOMCs latest meeting revealed that the Federal Reserve played down anticipations of some of its own members that interest rates might be raised faster than projected.

According to the release, “several participants noted that the increase in the median projection overstated the shift in the projections. Some expressed concern the rate forecasts could be misconstrued as indicating a move by the committee to a less accommodative reaction function.”

The oil complex also gained support after the resumption of exports from Libyas Zueitina and Hariga ports was delayed as lawmakers discussed the amnesty of gunmen who seized control over the terminals last summer.

According to Sunday’s deal between rebels and the central government, Libya’s Zueitina and Hariga ports should have reopened immediately, while the two larger ports, Ras Lanuf and Es Sider, are supposed to be surrendered within the next two to four weeks after more negotiations. Es Sider, the country’s largest port, has a daily capacity of 340 000 bpd, while Ras Lanuf can ship 220 000 barrels per day.

The oil market was also pushed higher amid simmering tensions between Russia and the West. Moscow dismissed fears in Kiev and the West over thousands of Russian troops amassed near its border to Ukraine as “groundless”, blaming Washington for spurring tension between the sides. This comes after U.S. Secretary of State John Kerry said on Tuesday that Russian agents have been fuelling separatist disorder in eastern Ukraine.