Oil Climbs as Refiners Signal Imminent Ramp Up Post-Maintenance
(Bloomberg) -- Oil rebounded from a two-month low as refiners started to wind down seasonal repairs, a signal of an imminent jump in crude demand.
Futures climbed 0.6 percent in New York on Wednesday, although those gains were capped by a government report showing a bigger-than-expected increase in American crude stockpiles. Refiners began to raise activity rates from levels last seen in March, while U.S. gasoline inventories declined at the fastest rate in seven months.
“We did see some pretty hefty draws on the gasoline and distillate side,” said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise in Leawood, Kansas. Expect some large withdrawals of crude from storage over the next month as refiners come out of maintenance season, he said.
Oil in New York is on track for the worst monthly decline since July 2016 after Saudi Arabia pledged to fill any supply shortfalls as Iranian exports dwindle under U.S. sanctions. Lingering questions about the killing of Saudi regime critic Jamal Khashoggi inside the kingdom’s Istanbul consulate added a geopolitical risk premium to crude markets.
West Texas Intermediate crude for December delivery edged up by 39 cents to settle at $66.82 a barrel on the New York Mercantile Exchange. Total volume traded was about 10 percent above the 100-day average. WTI closed below its 200-day moving average for a second straight session.
Brent for December settlement fell 27 cents to end the session at $76.17 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $9.35 premium to WTI.
The Energy Information Administration reported on Wednesday that domestic crude supplies rose by 6.35 million barrels last week, compared with the median 3.7 million-barrel estimate in a Bloomberg survey. Gasoline supplies fell by 4.83 million barrels and distillate stockpiles slid for a fifth straight week.
Gasoline futures fell 0.8 percent to settle at $1.8223 a gallon, the lowest since February.
“You saw a big increase in product supplied and that was part of why you had the decline in product inventories,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This is perhaps post-Michael recovery in deliveries, so people are not taking the decline too seriously.”
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