NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled sharply higher Wednesday afternoon. West Texas Intermediate crude and Brent on the Intercontinental Exchange rallied to fresh 2-1/2 year highs, supported by estimates U.S. crude oil and middle distillate fuel supplies were drawn down during the week-ended Dec. 29 amid strong demand.
The rally for oil futures was also driven by strong demand for heating oil, a distillate fuel, in the Northeast this week, where frigid weather has depleted fuel supplies while icy conditions have slowed deliveries to the New York Harbor, according to analysts.
Steve Strohmaier, a U.S. Coast Guard spokesman in New York, said they have deployed ice-breakers in the Hudson River to clear the way for barges to move freely so they can deliver products to the New York Harbor, where fuel supplies are reportedly running low. "Barge movement is a little slower, but commercial vessel traffic is not affected," he said.
For last week, the market estimates a U.S. crude stock draw of 4.75 million bbl that if confirmed late morning Thursday by the Energy Information Administration would be the seventh straight weekly crude stock draw in the United States.
Crude stocks at the Cushing, Oklahoma, delivery hub for WTI crude oil futures are estimated to have declined by 2.0 million bbl. U.S. gasoline stockpiles were expected to have increased by 1.25 million bbl and distillate fuel supply to have declined by 750,000 bbl during the week-ended Dec. 29.
Internationally, ICE Brent futures were supported by geopolitical risks spurred by the weeklong uprising in Iran and President Donald Trump's threat against North Korea. There is concern protests in Iran could escalate to the point where it begins to impact oil production or exports if oil workers join the uprising, said analysts.
Iran produced more than 3.8 million bpd of crude oil in November, according to the December Oil Market Report by the Organization of the Petroleum Exporting Countries.
NYMEX February WTI crude futures settled $1.26 higher at $61.63 bbl, near a new 2-1/2 year spot high of $61.86. March Brent crude oil futures on ICE platform settled $1.27 higher at $67.84 bbl, a dime away from a $67.94 2-1/2 year spot high, with Brent's premium to WTI little changed at $6.21 bbl.
NYMEX February ULSD futures settled 2.96cts higher at $2.880 gallon while NYMEX February RBOB futures gained 3.43cts to $1.7974 gallon at settlement.
George Orwel can be reached at firstname.lastname@example.org
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.