Oil’s Advance Peters Out Despite Surprise U.S. Crude Withdrawal

(Bloomberg) -- Oil’s longest streak of gains in almost two months lost momentum after swelling domestic fuel inventories neutralized a surprise decline in domestic crude inventories.

Futures in New York settled a penny below a three-month closing high on Wednesday. Crude supplies held in U.S. storage fell to levels not seen since early November following last week’s 1.1-million-barrel withdrawal. Still, stockpiles of gasoline, diesel and heating oil expanded even as as demand rebounded.

“The report was modestly bullish,” said Matt Sallee, portfolio manager at Tortoise, a Kansas firm that oversees more than $21 billion in assets. “Gasoline continued its seasonal build.”

U.S. crude exports rose last week to the highest level since October, contributing to the inventory draw, the Energy Information Administration said. One measure of oil-market volatility tumbled to the lowest level since April.

Crude has rallied more than 10% this month as the Organization of Petroleum Exporting Countries and allies agreed to deeper-than-expected output cuts and amid signs that trade tensions between the world’s two largest economies are easing. However, the prospects of increased supplies from nations outside the cartel my limit any price gains.

West Texas Intermediate crude for January delivery, which expires Thursday, fell 1 cent to $60.93 a barrel on the New York Mercantile Exchange.

Brent for February settlement rose 7 cents to $66.17 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.32 premium to WTI for the same month.

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