Oil End the Day Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed Thursday afternoon amid varied reports on oil supply and demand fundamentals domestically and globally, with West Texas Intermediate crude eking out a modest gain after the Energy Information Administration reported a surprise build in U.S. crude oil stockpiles and bigger-than-expected build in gasoline stocks.

The EIA report showed U.S. crude oil inventories added 2.3 million bbl to 485.5 million bbl during the week-ended Jan. 13, but the bearish crude data was ameliorated by other data showing crude stocks at the Cushing supply hub in Oklahoma unexpectedly fell by 1.2 million bbl to 65.7 million bbl.

On products, the EIA report showed domestic gasoline stocks soared 6 million bbl while middle distillate supplies fell 986,000 bbl, missing forecasts for builds of 1 million bbl each.

Implied demand for gasoline tumbled by 401,000 bpd and refinery crude inputs plummeted 639,000 bpd as refinery runs dropped by 2.9% to 90.7%, but distillates demand jumped 897,000 bpd for the week, EIA said.

"The DOE data for last week was bearish relative to expectations for crude oil," said analyst Tim Evans at Citi Futures. "A drop in refinery runs offset the decline in imports… Weak demand offset lower refinery output last week."

The oil futures complex was boosted by data late Wednesday from the American Petroleum Institute which reported a bigger-than-expected U.S. crude stock draw of 5 million bbl for the week, and the International Energy Agency this morning revised up its global oil demand estimate for 2016.

IEA now projects a year-on-year global consumption growth rate of 1.5 million bpd for 2016 based on stronger European demand due to severe winter weather, revised up by 100,000 bpd versus December outlook. For 2017, IEA expects global demand growth rate to revert back to 1.3 million bpd, slightly above the average rate seen in this century of 1.2 million bpd.

The Paris-based IEA sees global oil supplies falling by more than 600,000 bpd in December to 97.6 million bpd on lower OPEC and non-OPEC output. For 2016, world supply was up 300,000 bpd from the previous year as record OPEC output more than offset a 900,000 bpd decline in non-OPEC.

OPEC crude production, now excluding Indonesia, fell 320,000 bpd from record rates to 33.09 million bpd in December following lower output by Saudi Arabia and disruptions to Nigerian supply.

Early indications suggest a deeper OPEC reduction may be under way for January, as the Saudis and their Arab Gulf neighbors enforce supply cuts, said IEA.

NYMEX February West Texas Intermediate futures settled up 29cts at $51.37 bbl, and ICE March Brent crude oil futures contract finished 24cts higher at $54.16 bbl.

The NYMEX February ULSD futures contract edged up 0.91cts to $1.6183 gallon and the February RBOB futures contract eased 1.42cts to $1.5345 gallon at the close of regular session trading.

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