Oil Futures Settle Higher on EIA Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures recovered from a shaky start to trade and settled higher Wednesday afternoon. This comes after data from the Energy Information Administration showed a more-than-expected stock draw for crude oil at the Cushing terminal in Oklahoma and a surprise stock draw for distillate fuel supply.

A weaker U.S. dollar and higher equities on Wall Street also boosted the oil futures complex, as investors concerns over inflation heightened this morning by data showing the U.S. consumer price index rose 0.5% in January, while up 2.1% on the year, faded. The dollar and oil trade inverse to each other.

"A lot of this [oil] rally was about a weaker dollar and strong equities," said analyst Kyle Cooper at IAF Advisors. "Plus, the total petroleum stocks are still 182 million bbl below a year ago and only 600,000 bbl above their five-year average."

He added, "While crude stocks rose 1.8 million bbl, the trend has been super-bullish."

EIA's data for the week-ended Feb. 9 showed total commercial petroleum inventories fell 2.7 million bbl build last week, while total products supplied over the last four-week period averaged 20.7 million bpd, up 6.9% from the same period last year.

Internals of the EIA report showed a third straight weekly build in crude oil stocks, 1.8 million bbl higher at 422.1 million bbl last week that surpassed an estimated 500,000 bbl increase.

However, crude supply at the Cushing delivery point for NYMEX West Texas Intermediate crude declined by a more-than-expected 3.6 million bbl to a 32.7 million bbl better-than three-year low.

On products, EIA reported gasoline inventories increased 3.6 million bbl to 249.1 million bbl, but down 10.0 million bbl year-on-year. Distillate supply declined 459,000 bbl to 141.1 million bbl, with stocks 28.7 million bbl lower than a year ago.

The EIA data came a day after the American Petroleum Institute on Tuesday reported a crude stock build of nearly 4.0 million bbl, a gasoline stock increase of 4.6 million bbl and a gain for distillate inventory of 1.1 million bbl.

EIA also reported U.S. crude oil production rose by 20,000 bpd last week to a 10.271 million bpd record high. The U.S. production data has been the soft underbelly of the oil market, undercutting efforts to unwind the supply overhang in the 35-member Organization for Economic Cooperation and Development.

NYMEX March WTI crude futures settled $1.41 higher at $60.60 bbl, off a four-day high of $60.90. April Brent crude settled up $1.64 at $64.36 bbl, off a $64.58 three-day high, and at a $3.76 bbl premium to WTI.

NYMEX March ULSD futures jumped 4.75cts to a $1.8844 gallon settlement, off a three-day high at $1.8925. March RBOB futures were up 2.77cts at $1.7130 gallon, near a two-day high of $1.7243.

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