NEW YORK (DTN) -- Spot-month oil futures on the New York Mercantile Exchange advanced at the start of regular trade Thursday morning after the U.S. Energy Information Administration reported strong demand for products that overshadowed a build in crude supply.
The EIA report issued Wednesday detailed a 631,000 bpd or 7.6% spike in gasoline demand to a 8.941 million bpd six-week high during the week-ended Feb. 3, while distillate demand rose by 101,000 bpd to a 3.91 million bpd two-week high.
"Gasoline demand is stronger than we thought," said analyst Phil Flynn at Price Futures. "We've been underestimating demand."
The demand surge was accompanied by an unexpected 869,000 bbl decline in gasoline stocks while distillate inventories edged up by a less-than-expected 29,000 bbl during the week reviewed.
Oil futures were also lent upside support by talk this week by some members of the Organization of Petroleum Exporting Countries to extend crude production cuts for another six months, with their current agreement ending June 30.
At 9:00 AM ET, NYMEX March RBOB futures rose 2.48cts to $1.5775 gallon while NYMEX March ULSD futures added 1.37cts to $1.6497 gallon. NYMEX March West Texas Intermediate futures rose 56cts to $52.90 bbl while ICE April Brent crude oil futures gained 44cts to $55.56 bbl.
The bullish products data reported by the EIA overshadowed a 13.8 million bbl build in crude stockpiles for the week profiled, with crude supplies at the Cushing, Okla., terminal rising by 1.1 million bbl. The large crude build was also discounted because of a surge in imports, up 1.082 million bpd to a 9.372 million bpd 52-month high, that is not expected to be repeated.
Comments by oil ministers from Iran and Qatar on Wednesday that OPEC and participating non-OPEC crude-producing nations who agreed last year to cut production during the first half of this year may need to extend those output cuts into the second half of the year in order to rebalance the market also boosted oil futures.
OPEC and its 11 non-OPEC partners agreed in late November and early December to cut output by a combined 1.758 million bpd. OPEC has so far followed through on their pledge, reported to have implemented 80% of the agreed to cuts.
George Orwel can be reached at firstname.lastname@example.org
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