Oil Futures End Higher

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Thursday afternoon, boosted by easing worries the economy would be affected by a potential exit by Britain from the European Union and reports of an attack on an oil pipeline in Nigeria.

"It looks like the Britain should stay in the EU camp is going to win, and stability in Europe is good for energy demand," said analyst Phil Flynn at Price Futures Group in Chicago.

British citizens were casting ballots in a referendum today to decide their EU membership, a once in a generation decision that analysts have said would determine the country's future economic prosperity and the course of the region.

A great deal of uncertainty remains, with final results expected Friday morning. The final polls showed the campaign to remain in the EU ahead by four points. As a result, the sterling pound rose to a year-to-date high while the dollar fell to a seven-week low, with a weaker greenback boosting oil prices.

NYMEX August West Texas Intermediate crude oil futures settled up 98cts at $50.11 bbl while August Brent crude contract on the IntercontinentalExchange gained $1.03 to a $50.91 bbl settlement.

In products trade, NYMEX July ULSD futures climbed 1.58cts to settle at $1.5206 gallon and July RBOB futures gained 1.53cts to a $1.6035 gallon settlement.

On Wall Street, all the three major U.S. stock indices rallied on risk-on trade, with the Dow Jones Industrial Average up 200 points while S&P 500 surged 1.2%. The FTSE, U.K.'s main stock index, rallied for the fifth straight day.

Economic data released today were mixed, with weekly U.S. initial jobless claims, down more than forecast, while European manufacturing growth slowed.

Short-covering triggered by concerns over Nigerian supply after a pipeline attack boosted oil futures.

"The market also gained on a report that said a Shell oil pipeline in Nigeria was attacked by militants," said Flynn. "There had been some hope for a ceasefire between the militants and Nigerian government...that's gone out the window, and so Nigerian oil supply won't improve from a multiyear low."

Separately, market intelligence firm Genscape reported a 1.0 million bbl crude stock draw in Cushing, Oklahoma, the delivery location for NYMEX WTI, for the week-ended June 21.

On Wednesday, the Energy Information Administration issued a bearish supply report for the week-ended June 17, showing builds for products inventories and a smaller-than expected decline in domestic crude oil supply. EIA reported crude oil inventories fell 917,000 bbl, below expectations for a 1.7 million bbl stock draw.

Domestic crude production fell 39,000 bpd to 8.677 million bpd last week, the lowest since September 2014, and down 927,000 bpd year-over-year, EIA data showed. The federal data also showed gasoline inventories increased 623,000 bbl versus an expected 300,000 bbl draw, and distillate stocks rose 151,000 bbl versus forecasts for a 200,000 bbl stock build.

EIA data showed modest gains in demand for gasoline, distillates and crude oil for the week ended June 17. Demand is seen improving during the U.S. summer peak driving season, with the EIA reporting a record high weekly rate of 9.815 million bpd.

George Orwel can be reached at george.orwel@dtn.com