NEW YORK (DTN) -- Spot-month oil futures on the New York Mercantile Exchange settled higher Thursday afternoon, lifted by strong demand for oil products and speculation there won't be another massive increase in crude oil stocks anytime soon.
The Energy Information Administration's report for the week-ended Feb. 3 released Wednesday detailed a 7.6% spike in gasoline demand to a 8.941 million bpd six-week high, while distillate demand rose 101,000 bpd to a 3.91 million bpd two-week high.
"Traders are looking ahead and what they see is continued drawdown in gasoline supply as we go into the peak of the turnaround season," said Houston-based analyst Andy Lipow, president of Lipow Oil Associates.
The EIA report also showed a 13.8 million bbl surge in crude inventory, although the market discounted that data arguing it was inflated by the ongoing refinery maintenance season and a large volume of imports that won't be repeated anytime soon.
"That big crude oil stock build we saw reflects the fact that several refineries have gone for turnaround [so refinery-throughput is less]," he said. "We had high oil imports that might have been scheduled for delivery before OPEC started cutting production [in January]."
In late trade, NYMEX March RBOB futures settled 1.75cts higher at $1.5702 gallon, off a $1.5811 one-week spot high, while NYMEX March ULSD futures edged up 0.55cts to $1.6415 gallon, off a $1.6624 three-day high.
NYMEX March West Texas Intermediate futures rose 66cts to a $53.00 bbl settlement, easing off a $53.21 two-day high, while ICE April Brent crude oil futures gained 51cts to $55.63 bbl at settlement, off a $55.92 two-day high.
The upside for oil futures was also underpinned by talk this week by some members of the Organization of the Petroleum Exporting Countries to extend crude production cuts for another six months after the deal currently being implemented expires on June 30.
OPEC and its 11 non-OPEC partners agreed on Nov. 30 and Dec. 10 to cut their production 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.
"The market is still watching OPEC to see whether they are complying with the agreement. And yes, U.S. oil production may be going up, but if worldwide inventory begins to draw down due to the OPEC supply cuts, that will be very supportive," added Lipow.
George Orwel can be reached at firstname.lastname@example.org
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