Oil Futures Close at 3-Year Highs

NEW YORK (DTN) -- New York Mercantile Exchange West Texas Intermediate futures and Brent crude on the Intercontinental Exchange ended Thursday's session at their highest settlement in more than three years following the seventh consecutive weekly crude oil stock draw in the United States while the NYMEX oil products contracts settled mixed following big inventory builds for gasoline and distillate fuel during the final full week of 2017.

The Energy Information Administration reported late morning a more-than-expected 7.4 million barrel (bbl) plunge in U.S. commercial crude oil inventories during the week-ended Dec. 29 to 424.5 million bbl, down 54.5 million bbl, or 11.4%, from a year ago. During the seven weeks ended Dec. 29, domestic crude stocks have been drawn down 34.4 million bbl, or 7.5%.

The steep crude stock draw was accompanied by another increase in the refinery run rate, which spiked 1.0% to a better-than-12-1/2-year high of 96.7% of operable capacity, with the utilization rate well above the 92.2% five-year average for the comparable week. Crude inputs at U.S. refineries climbed 210,000 barrels per day (bpd) to 17.608 million bpd for the week reviewed -- the most since the week before Hurricane Harvey slammed into Texas when inputs averaged a record high of 17.725 million bpd.

NYMEX February WTI crude futures settled 38cts higher at $62.01 bbl, the highest settlement on the spot continuation chart for WTI futures since Dec. 9, 2014, when it settled at $63.82 bbl.

March Brent crude oil futures on the ICE platform settled 23 cents higher at $68.07 bbl, the highest settlement on the spot continuation chart since Dec. 5, 2014, when Brent settled at $69.07 bbl.

The big decline in U.S. crude stocks narrowed Brent's premium over WTI slightly to $6.06 bbl at settlement, with several days of protests in Iran underpinning support for Brent—the global price benchmark.

Analysts note citizen protests in Iran could affect the country's crude exports if oil workers join the protests. The protests also raise the stakes that the United States could slap sanctions on Iran's crude exports.

A severe winter snowstorm blasted the Eastern seaboard today, bringing gusty winds and blizzard conditions all the way from Virginia to Maine after dumping record snowfall in parts of Florida and Georgia, with temperatures forecast to plummet over the next two days.

Despite the harsh winter weather along the eastern seaboard, including the Northeast which accounts for the largest concentration of demand for heating oil, NYMEX February ULSD futures settled down 1.10 cents at $2.0770 gallon.

The lower settlement follows an unexpected and large build in distillate fuel supply for the final full week of 2017 amid a plunge in demand. EIA reported distillate supply increased 8.9 million bbl to 138.8 million bbl last week.

EIA also reported a 4.8 million bbl build in gasoline stocks for the week profiled to 233.2 million bbl, with the supply increase coming alongside an 834,000 bpd plunge in implied demand to 8.65 million bpd.

NYMEX February RBOB futures still eked out a gain, up 0.93 cent to settle at $1.8067 gallon after edging off a six-week spot high of $1.8111.

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