Oil Futures Settle Higher

Oil Futures Settle Higher

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures advanced on Wednesday, adding to the prior session's gains after the U.S. Energy Information Administration reported crude oil inventories dropped for the eighth consecutive week, and a report stated Libyan oil output from its Sharara oilfield has been shut again today.

"[EIA report showed] both gasoline and distillate exports were slightly higher, a good sign in general for the global economy, but while the headlines were bullish the overall report was considered very neutral," said analyst Kyle Cooper at ION Energy in Houston.

The EIA report detailed a 3.3 million bbl crude oil stock draw that trimmed total crude stockpiles to a fresh 19-month low at 463.2 million bbl during the week ended Aug. 18.

Crude stocks at Cushing, Oklahoma, the delivery point for West Texas Intermediate crude, fell by 500,000 bbl. The draws for crude stocks came despite refinery crude intake falling 104,000 bpd and refinery utilization easing 0.7% to 95.4% during the week reviewed.

The report also showed output rose by 26,000 bpd to a better than two-year high of 9.528 million bpd.

The report showed gasoline supply declined by 1.2 million bbl while demand increased 107,000 bpd. Distillate fuel stocks unexpectedly increased by 28,000 bbl as demand for the fuel fell by 145,000 bpd for the week.

The market was further bolstered by a storm heading towards the Gulf of Mexico that threatens to disrupt offshore oil production and delay oil imports into the ports of Houston and New Orleans.

Tropical Depression Harvey is expected to resume its northwestward course and could strengthen into a hurricane on Friday, according to the National Hurricane Center.

At settlement, NYMEX October WTI crude contract gained 58cts to $48.41 bbl. October Brent crude contract on the IntercontinentalExchange rose 70cts to $52.57 bbl. NYMEX September ULSD futures rallied 3.32cts to $1.6244 gallon and September RBOB futures climbed 2.81cts to $1.6189 gallon.

Overseas, there has been confusion about the status of Libyan Sharara oilfield, which was shut on Saturday and restarted on Tuesday before being shut again. Today, Reuters reported that the 270,000 bpd oilfield remained closed.

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