WTI Oil Rises for Second Day as U.S. Chill Erodes Fuel Supplies

Feb 19, 2014 8:52 am ET

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Feb. 19 (Bloomberg) -- West Texas Intermediate rose for a second day as cold weather boosted fuel demand in the U.S., the world’s biggest oil consumer.

Futures climbed as much as 0.8 percent in New York. Supplies of distillates, such as heating oil and diesel, probably decreased by a median 2.1 million barrels last week as a winter storm brought snow to the U.S. Northeast, according to a Bloomberg survey before data tomorrow from the Energy Information Administration. That would be a sixth weekly decline, the longest stretch since October 2012.

“The ongoing cold snap is still there, and refinery runs have been fairly decent,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “We are still looking for a pullback in prices once global refinery runs slip with the seasonal maintenance period.”

WTI for March delivery increased as much as 85 cents to $103.28 a barrel in electronic trading on the New York Mercantile Exchange, and was at $103.26 at 1:50 p.m. London time. The contract, which expires tomorrow, advanced $2.13 to $102.43 yesterday, the highest settlement since Oct. 10. The volume of all futures traded was about 90 percent above the 100- day average. Prices climbed 4.9 percent this year.

Brent Falls

Brent for April settlement rose 6 cents to $110.52 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.70 to WTI for the same month, compared with $8.36 yesterday, the narrowest closing level since Oct. 17.

U.S crude inventories probably expanded by 2 million barrels, the median of eight estimates in a Bloomberg poll shows before tomorrow’s EIA report.

Supplies at Cushing, the nation’s largest oil-storage center and the delivery point for benchmark crude contracts, probably dropped for a third week, according to a separate Bloomberg survey before the EIA data tomorrow.

“Supporting the rise was speculation of a crude oil inventory draw at Cushing, as well as persistent cold weather in the U.S.,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd., said in an e-mailed note today. “The Midwest and southern U.S. states are experiencing unseasonably low temperatures, which continue to support demand for heating fuels.”

Cushing Supplies

Futures increased in the five weeks through Feb. 14 as cold weather boosted energy demand and Cushing supplies shrank to the lowest level since November. Stockpiles at the storage hub are forecast to have declined last week by a range of 1 million to 1.9 million barrels, according to the survey of analysts including Jim Ritterbusch, the president of Ritterbusch & Associates, a consultant in Galena, Illinois.

In Boston, snowfall started at midday yesterday as the second storm in three days blew into the U.S. Northeast and Mid- Atlantic, grounding flights and snarling travel.

The EIA will release its report a day later than usual because of the U.S. Presidents Day holiday. The industry-funded American Petroleum Institute will publish separate supply data today.

WTI is also extending gains after triggering a bullish technical formation known as a double-bottom reversal, data compiled by Bloomberg show. Crude yesterday settled higher than $100.32 a barrel, the Dec. 27 close that’s flanked by the lows of late November and mid-January. Investors typically buy contracts when a chart-resistance level is breached.

--With assistance from Rupert Rowling in London. Editors: Bruce Stanley, Anthony DiPaola