Oil Rises as Supply Climbs Less Than Forecast, Fuel Output Gains
February 08, 2012, 6:22 PM ESTBy Mark Shenk
Feb. 8 (Bloomberg) -- Oil in New York climbed to the highest level this month after the U.S. Energy Department reported that supplies increased less than analysts forecast and refineries bolstered fuel production.
Futures rose 0.3 percent after the report showed crude stockpiles gained 304,000 barrels, less than the 2.5 million barrels estimated in a Bloomberg News survey. Refiners ramped up gasoline output on the East Coast, and Brent crude traded in London jumped more than West Texas Intermediate oil in New York.
“The DOE report ended up having a few bullish features,” said Phil Flynn, an analyst at PFGBest in Chicago. “Refiners along the coast will have to spend more because Brent is higher today. Brent is more important to them than WTI.”
Crude oil for March delivery increased 30 cents to $98.71 a barrel on the New York Mercantile Exchange, the highest settlement price since Jan. 30. Futures are up 14 percent from a year ago.
Brent oil for March settlement climbed 97 cents, or 0.8 percent, to end the session at $117.20 a barrel on the London- based ICE Futures Europe exchange. It was the highest settlement since July 28.
The European benchmark was at a $18.49 a barrel premium to West Texas Intermediate oil at the close of trading. The spread was 67 cents wider than yesterday.
“Brent has taken the lead again,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “WTI was the big mover yesterday but Brent’s showing strength now and that’s helping gasoline, since it moves with Brent.”
Gasoline for March delivery climbed 4.77 cents, or 1.6 percent, to $2.9752 a gallon in New York, the highest settlement since Aug. 31.
Rising Inventories
Crude oil supplies rose to 339.2 million barrels in the week ended Feb. 3, the highest level since October, the report showed. Inventories at Cushing, Oklahoma, the delivery point of WTI traded in New York, climbed 367,000 barrels to 30.5 million, the most since Dec. 9.
“The gain may have been smaller than expected, but it’s still another build,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “Week after week we continue to see supplies increase.”
Refineries operated at 82.8 percent of capacity, up 1 percentage point from the week before, the report showed. Analysts projected there would be a 0.4 percentage point decrease in utilization rates. Gasoline production rose 0.7 percent to 8.63 million barrels a day last week.
Fuel Supplies
Gasoline inventories climbed 1.63 million barrels to 231.8 million last week, the department said today. Stockpiles were forecast to rise 875,000 barrels, according to the median of 10 analyst responses in a Bloomberg News survey.
Supplies of distillate fuel, a category that includes heating oil and diesel, gained 1.17 million barrels to 146.6 million. Stockpiles were forecast to fall 875,000 barrels.
Total fuel demand fell 0.5 percent to 17.6 million barrels a day, the lowest level since 1999, the report showed.
Oil rose to the day’s high of $100.09 a barrel as Greek leaders worked on a rescue plan with creditors. Prime Minister Lucas Papademos began negotiating today with leaders of the political parties supporting his caretaker government.
Papademos held an unscheduled meeting late yesterday with the so-called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches on terms required for a 130 billion-euro ($172 billion) rescue package.
‘Psychological Warfare’
Ramin Mehmanparast, spokesman for the Iranian Foreign Ministry, said yesterday that the latest U.S. sanctions against his country’s financial institutions were “psychological warfare.” President Barack Obama Feb. 6 ordered a block on property and interests in property belonging to the Iranian government, its central bank and all Iranian financial institutions.
Iran has said it may close the Strait of Hormuz, the transit point for about a fifth of global crude, after the European Union announced Jan. 23 that it will implement an oil embargo starting July 1 to pressure the Islamic republic over its nuclear program.
“We’re waiting for the other shoe to drop in both the Greek and Iranian situations,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.
Oil volume in electronic trading on the Nymex was 849,702 contracts as of 4:26 p.m. in New York. Volume totaled 1.15 million yesterday, the highest level since Nov. 16 and 91 percent above the three-month average. Open interest was 1.48 million contracts, the most since Sept. 12.
--Editors: Margot Habiby, Bill Banker
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
