Oil Up as US Crude Stocks Barely Built Amid Refining Halt

VIENNA (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange moved higher early morning Wednesday, partially propelled by an industry report showing U.S. crude oil stocks building only moderately last week despite operations at the 435,000-barrels-per-day (bpd) Whiting refinery in Indiana being halted since Feb. 1.

The American Petroleum Institute on Tuesday reported a larger-than-expected drop in distillate fuel oil stocks in the week ended Feb. 2, while the build in commercial crude oil inventories fell short of expectations and the increase in gasoline stocks was well above calls. API reported commercial crude oil inventories added 674,000 barrels (bbl), below calls for a build of 1.3 million bbl. Stocks at the Cushing, Oklahoma, tank farm, the New York Mercantile Exchange delivery point for West Texas Intermediate futures, added 492,000 bbl last week. Gasoline inventories jumped 3.65 million bbl, far above estimates for a 300,000-bbl increase, while distillate fuel oil stocks tumbled 3.7 million bbl, more than the expected 2-million-bbl draw.

Next, markets are awaiting the 10:30 a.m. EST release of weekly inventory data by the U.S. Energy Information Administration.

Data released by Germany's Federal Statistical Office this morning showed a 1.6% contraction in industrial output in December compared to November. The seventh consecutive monthly decline in energy-intensive manufacturing despite the drop in natural gas prices has industrial production trailing year-ago levels by 3.1% and raises concerns over Europe's demand outlook.

In its February Short-term Energy Outlook released Tuesday afternoon, the EIA raised its draw expectation to global oil inventories to 800,000 bpd for the first quarter, due to OPEC+ production discipline and a near halt in U.S. production growth. More than half the draw is expected to be realized in total oil stocks held by countries that are part of the Organization for Economic Cooperation and Development bloc, which the agency estimates will end the quarter at 2.735 billion bbl.

Nearing 8 a.m. EST, WTI futures for March delivery gained $0.50 to $73.81 bbl, while Brent for April delivery was up $0.50 bbl to $79.20 bbl. NYMEX March RBOB futures added $0.0198 to $2.2371 gallon, while the March ULSD contract jumped $0.039 to $2.782 gallon.

Karim Bastati can be reached at karim.bastati@dtn.com