Oil Futures Settle Higher

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher Wednesday afternoon ahead of weekly oil statistics that are expected to show U.S. crude oil inventories were drawn down for the ninth straight week through Jan. 12, while gasoline demand is expected to have increased.

"The market is just consolidating ahead of the weekly oil reports," said Jim Ritterbusch, president of Ritterbusch Associates in Galena, Ill. "RBOB futures made new highs and led the market higher as gasoline demand and exports are picking up."

NYMEX February RBOB futures settled 2.0cts higher at $1.8584 gallon, off a 4-1/2 month high on the spot continuation chart of $1.8667. NYMEX February ULSD futures settled up 0.57cts at $2.0691 gallon, reversing from a one-week low of $2.043 gallon, while holding below Tuesday's three-year spot high of $2.1083 gallon.

NYMEX February West Texas Intermediate crude futures settled 24cts higher at $63.97 bbl, holding below Tuesday's $64.89 three-year spot high on the continuation chart. Intercontinental Exchange March Brent crude futures settled 23cts higher at $69.38 bbl, closing the session at a $5.41 bbl premium to WTI futures. The spot-month Brent contract settled at $70.26 bbl on Monday—the first session with a settlement over $70 bbl since December 2014.

A survey earlier Wednesday showed analysts estimate domestic crude supply declined 3.75 million bbl last week, with crude supply at the Cushing hub in Oklahoma seen down 2.0 million bbl.

The Energy Information Administration last week reported U.S. commercial crude stocks at 419.5 million bbl on Jan. 5, a 2-1/2-year low, and 63.6 million bbl or 13.2% below supply on-hand a year ago. Wednesday's survey also estimates gasoline supply increased by 1.25 million bbl during the week-ended Jan. 12 while distillate fuel supply declined by 1.0 million bbl.

The American Petroleum Institute will release its weekly report at 4:30 PM ET and the EIA their weekly data set at 11:00 AM ET Thursday. Concerns about Nigerian oil supply also underpinned Wednesday's futures advance, especially for Brent.

Niger Delta Avengers, a militant group that has in the past sabotaged pipelines in Nigeria, threatened to attack offshore oil facilities on Wednesday. The latest threat follows nearly a year of relative stability for the oil industry in the North African country that, in turn, led to a recovery in its crude production.

The most recent data from OPEC released in December shows Nigerian crude production at 1.75 million bpd in November, up from 1.43 million bpd in 2016.

OPEC will provide December production data for its members Thursday morning in its Monthly Oil Market Report, and the International Energy Agency will release its latest monthly outlook with its Oil Market Report set for release Friday morning.

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