Crude rises as weather affects this key fundamental

February 4, 2014 03:47 PM
Traders speculator on EIA report

West Texas Intermediate crude rose for a second day on speculation a U.S. government report will show distillate inventories fell amid cold weather in the country, the world’s biggest oil consumer.

Futures climbed as much as 0.7 percent in New York. Distillate supplies, including heating oil and diesel, probably shrank by 2.5 million barrels to 113.7 million last week, according to a Bloomberg News survey before data from the Energy Information Administration. An industry report yesterday showed stockpiles dropped 1.46 million. A second winter storm this week is moving into the U.S. Northeast.

“Distillate demand is likely to have remained healthy, supported by the run of frigid weather conditions in the U.S.,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today. “Expectations are for a further fall in distillate inventories.”

WTI for March delivery increased as much as 69 cents to $97.88 a barrel in electronic trading on the New York Mercantile Exchange, and was at $97.67 at 12:35 p.m. Sydney time. The contract gained 0.8 percent to $97.19 yesterday, halting a two- day loss. The volume of all futures traded was about 23 percent below the 100-day average.

Brent for March settlement advanced as much as 31 cents, or 0.3 percent, to $106.09 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $8.31 to WTI. The spread was $8.59 yesterday, the narrowest based on closing prices since October.

Crude Supplies

WTI has risen the past three weeks as distillate demand expanded and inventories decreased amid cold weather. Snow spreading over the central U.S. will be followed by freezing rain and sleet today, according to Tom Kline, a meteorologist at AccuWeather Inc.

U.S. crude stockpiles climbed by 384,000 barrels in the week ended Jan. 31, the industry-funded American Petroleum Institute said in Washington. Supplies probably increased by 2.55 million, according to the median estimate of 10 analysts surveyed by Bloomberg before today’s report from the EIA, the Energy Department’s statistical arm.

Gasoline inventories slid by 1.18 million barrels last week, the API data show, compared with a projected gain of 1.15 million in the survey.

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