Oil Futures Settle Up on Crude Stocks

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher Thursday after the Energy Information Administration reported a bigger-than-expected U.S. crude stock draw of 4.6 million bbl and stronger demand for crude, gasoline and distillates in the week ended Dec. 22.

"Continued draws in the unfinished and other categories led to another large overall total petroleum stock draw," said analyst Kyle Cooper at IAF Advisors, and he added, "The overall draw was mitigated by small Strategic Petroleum Reserve refill."

U.S. crude stocks have now fallen for the sixth consecutive week, with domestic crude stockpiles drawn down a combined 16.2 million bbl or 3.6% during the three weeks through Dec. 22 to 431.9 million bbl, the lowest inventory level since October 2015.

The steep stock draws for crude oil reflect strong demand. The U.S. refinery utilization rate jumped 1.6% to 95.7% of operable capacity last week, with crude inputs climbing 335,000 bpd to 17.4 million bpd for the week reviewed, the EIA showed.

The report also showed domestic crude production fell for the first time after nine weeks with an increase, down 35,000 bpd from a 47-year high to 9.754 million bpd during the week ended Dec. 22.

"U.S. oil production fell with both lower 48 and Alaska lower on the week," said Cooper, adding, "While I expect lower 48 production to continue rising strongly, it is at least not bearish this week."

On products, EIA reported unexpected stock builds of 591,000 bbl for gasoline and 1.1 million bbl for distillates, missing calls for draws of 1.75 million bbl for both products. Implied demand increased 59,000 bpd for gasoline and by 400,000 bpd for distillates during the week-ended Dec. 22.

At 129.9 million bbl, total distillate fuel stocks are 21.7 million bbl or 14.3% below a year ago, and this comes as wintry weather conditions have brought bone-chilling cold to the Midwest and Northeast regions over the past several days.

Overall, the data showed total products supplied over the last four-week period averaged 20.6 million bpd, up by 3.5% from the same period last year.

Earlier, Forties crude pipeline operator Ineos said repairs on the line are complete and all restrictions on the flow of oil and gas from North Sea platforms have been lifted, adding they now expect oil flows to reach normal rates of 450,000 bpd by New Year's Day. Libya's al-Zouk pipeline that ships oil to Es Sider export terminal is also expected to restart next week after Tuesday's forced shutdown.

NYMEX February West Texas Intermediate crude futures settled up 20cts at $59.84 bbl. February Brent crude oil futures on the Intercontinental Exchange settled 28cts higher at $66.72 bbl. NYMEX January ULSD futures were up 1.19cts higher at $2.0551 gallon. January RBOB futures were 0.15cts higher at $1.7930 gallon.

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