Oil Futures Up on Bullish EIA Data

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher Wednesday afternoon, rallying on bullish data from the Energy Information Administration, Libyan oil supply outage and hope for an extension of output cuts by the Organization of the Petroleum Exporting Countries and their 11 non-OPEC allies.

"[This is] a rather bullish report," said analyst Kyle Cooper at IAF Advisors in Houston. "Total petroleum inventories fell 4.7 million barrels per day (bpd) and dropped the year-over-year inventory surplus to under 10 million."

The EIA's report showed a smaller-than-expected crude oil stock build during the week-ended March 24, with crude stocks up nearly 900,000 barrels (bbl) to a 534.0 million bbl new record high, but that increase was offset by a 200,000 bbl crude stock decline at the Cushing terminal storage in Oklahoma, the delivery location for NYMEX West Texas Intermediate crude futures.

The report also showed larger-than-expected stock draws for refined oil products, with gasoline stocks down 3.7 million bbl and distillate fuel inventories down by 2.5 million bbl.

Crude oil and distillates imports fell by 83,000 bpd and 12,000 bpd, respectively, while domestic crude production rose 18,000 bpd to 9.147 million bpd for the week profiled. Implied demand was higher for gasoline, distillates and crude oil, while refinery runs increased 1.9% to 89.3% for the week.

At settlement, May NYMEX WTI futures were $1.14 higher at $49.51 bbl, ending near a $49.54 two-week high on the spot continuation chart and at a 49 cents discount to the June contract.

The IntercontinentalExchange May Brent crude futures contract jumped $1.09 to a $52.42 bbl settlement and near a two-week high of $52.46.

In products trade, NYMEX April ULSD futures rallied 2.58 cents to $1.5425 gallon and near a $1.5441 three-week high. NYMEX April RBOB futures rallied 3.71 cents to settle at $1.6720 gallon and near a three-week high of $1.6749.

Libyan oil officials said the country's oil production was reduced by about 200,000 bpd to roughly 500,000 bpd after a crude oil pipeline connecting the Sharara oilfield with Zawiya export terminal was shut following clashes between different militia groups prompting a force majeure to be declared.

It remains unclear when the Libyan supply outage will end, although the incident raises the prospect of lower supply by OPEC despite the fact that Libya is exempt from the nearly 1.8 million bpd in production cuts agreed to last year by OPEC and their 11 non-OPEC allies.

A consensus is building for an extension of the production cuts beyond the June deadline, with OPEC set to discuss the issue at its meeting scheduled in May. Non-OPEC Russia and Iran said on Tuesday that they have agreed to help stabilize the oil market, with Saudi Arabia reportedly waiting to see if global inventories fail to drop below their five-year average before agreeing to an extension.

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