Crude Rallies as Draw in U.S. Fuel Stocks Outweighs Crude Build
(Bloomberg) -- Oil turned positive hours after a U.S. government report showed large declines in fuel inventories, outweighing a bigger-than-expected crude build.
Futures rose 1.1% in New York on Thursday. The Energy Information Administration reported that American gasoline and distillate supplies shrank by a combined 6.4 million barrels after almost 17% of domestic refining capacity went dark last week. Crude also followed equities higher amid a spate of mostly positive earnings reports.
“The big draws on gasoline, on distillates is very supportive,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago.
Prices tumbled earlier in the session after EIA data showed U.S. crude stockpiles swelled at more than three times the rate analysts forecast in a Bloomberg survey.
Crude prices have been under pressure for months over protracted concerns about the strength of global demand and escalating output from U.S. shale fields.
“These weekly inventory reports are short-term trading blips,” said Nick Holmes, who helps manage about $7.5 billion at Tortoise in Leawood, Kansas. “Concern about where demand is going to shake out for the rest of this year and 2020 is weighing on the price of crude.”
West Texas Intermediate for November delivery rose 57 cents to settle at $53.93 on the New York Mercantile Exchange.
Brent crude for December settlement rose 49 cents to close at $59.91 on the London-based ICE Futures Europe Exchange, and traded at a premium of $5.88 to WTI for the same month.
The December 2019-December 2020 WTI spread widened 46 cents to $2.53 a barrel, as export demand is likely to increase as shipping costs retreat from sky-high levels. Freight rates shot up in recent weeks after the U.S. slapped sanctions on some subsidiaries of a China’s COSCO Shipping Corp.
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