NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher Thursday afternoon on short-covering after a selloff a day earlier, with a refinery fire and pipeline outage adding to the gains.
"People who were short reversed and started covering their spreads," said Phil Flynn at Price Futures.
"Gasoline got beat up so bad yesterday (12/13/17), so it's time to cover," said Tom Bentz, vice president at ABN AMRO. "The general view is that we've been in a corrective mood but we are now looking for an uptrend again going into January."
Bentz said a fire at Citgo's 157,500 bpd Corpus Christi refinery and the continuing shutdown of the Forties pipeline in Scotland boosted NYMEX RBOB futures and Brent futures on the Intercontinental Exchange, helping lift the rest of the oil complex.
A force majeure declared on Forties by pipeline operator Ineos after a crack was discovered on the line near Aberdeen on Monday is expected to last several weeks. The outage of the 445,000 bpd is expected to offset a global crude oil surplus forecast for the beginning of next year. Earlier, the oil futures complex was pressured after the International Energy Agency projected non-OPEC annual supply growth at 600,000 bpd to 58.1 million bpd in 2017 while revising higher its 2018 projection by 200,000 bpd for a 1.6 million bpd year-on-year growth rate to 59.7 million bpd.
The revision for the non-OPEC supply outlook was prompted by the pace of growth in U.S. shale output. IEA raised its annual growth forecast for total U.S. crude to 390,000 bpd this year and 870,000 bpd for 2018, while the agency left its global oil demand outlook unchanged. IEA said based on the current outlook, 2018 may be tricky. A projected 200,000 bpd surplus in the first half of 2018 would revert to a deficit of about 200,000 bpd in the second half, leaving the market in 2018 closely balanced.
At settlement, NYMEX January West Texas Intermediate crude oil futures were 44cts higher at $57.04 bbl, reversing off a $56.09 one-week low. ICE February Brent settled 87cts higher at $63.31 bbl, reversing off a $62.01 four-day low.
NYMEX January ULSD futures settled 0.55cts higher at $1.9099 gallon, off a $1.8826 one-week low. January RBOB futures advanced 2.40cts to $1.6707 gallon after inside trade.
George Orwel can be reached at George.firstname.lastname@example.org
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