(Bloomberg) -- Oil held above $52 after a government report signaled record overseas demand for U.S. crude and fuels, even as domestic drillers boosted output by the most in half a decade.
Oil futures seesawed in a 54-cent range in New York. Daily exports of crude, diesel and other petroleum products climbed to 7.66 million barrels last week, the Energy Information Administration said on Wednesday. Bullish aspects of the report such as falling gasoline and distillate stockpiles were tempered by the rise in oil production as well as a bump up in crude inventories.
“The exports are ripping higher,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone. “That’s very good for the market. At the end of the day, crude oil demand is only one part of the equation. If you have strong products demand, that means refineries are going to buy more crude oil to create those products. Demand looks great.”
Oil has held above $50 a barrel for the past two weeks in New York amid increasing confidence that supply cuts by the Organization of Petroleum Exporting Countries and allies including Russia will be extended beyond March. OPEC is said to be working on an exit strategy in an effort to reassure investors that the group will manage a controlled release of supplies to avoid a new glut when the curbs eventually expire.
West Texas Intermediate for December delivery fell 24 cents to $52.23 a barrel at 10:56 a.m. on the New York Mercantile Exchange. Total volume traded was about 19 percent below the 100-day average.
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Brent for December settlement rose 4 cents to $58.37 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $6.16 to WTI.
Gasoline futures rose as much as 1.6 percent to $1.7429 a gallon, the highest intraday level since late September. The gasoline crack spread, a rough measure of the profit from refining crude into gasoline, jumped as much as 5.7 percent.
U.S. crude stockpiles rose by 856,000 barrels last week, the EIA said. Oil supplies at the key Cushing, Oklahoma, pipeline hub decreased for the first time since August. At the same time, gasoline supplies fell by 5.47 million barrels and distillate supplies dropped by 5.25 million barrels.
Oil-market news:
- While an extension of cuts at OPEC’s May meeting exceeded market’s expectations, the failure to make deeper output reductions was a disappointment that led to oil prices weakening, BNP Paribas (PA:BNPP) SA wrote in a note, flagging the risk of history repeating itself when the cartel reconvenes next month.
- Iraq’s semi-autonomous Kurdistan Regional Government said it’s prepared to freeze the results of last month’s independence referendum that led to deadly clashes with government troops and hurt oil exports.
