Oil market firms on US energy report

5th February 2014, Comments 0 comments

World oil prices firmed on Wednesday as traders reacted to news of rising US crude supplies and a shrinking storage glut at the Cushing, Oklahoma, trading hub.

US benchmark West Texas Intermediate (WTI) for delivery in March advanced 20 cents to $97.39 per barrel.

Brent North Sea crude for March rose 42 cents to $106.20 a barrel in London deals.

American crude reserves rose by 400,000 barrels in the week ending January 31, the US government's Energy Information Administration (EIA) revealed on Wednesday.

That was the third weekly gain in a row but dashed expectations for a far bigger gain of 2.2 million barrels, according to analysts polled by The Wall Street Journal.

Stockpiles in Cushing meanwhile sank 1.5 million barrels to 40.3 million barrels. That was the lowest level since the week ending December 27.

"Lower stocks in Cushing are helping support US oil prices currently," said Natixis oil analyst Deshpande Abhishek.

"The recent news on foreign oil exports to Europe is providing further support to US oil prices."

The weekly energy report is a key driver of market sentiment because the United States is the world's biggest crude consuming nation.

The EIA added that reserves of distillates, which include diesel and heating fuel, sank 2.4 million barrels.

That indicated strong demand amid the cold snap and outstripped forecasts for a drop of two million.

And gasoline or petrol stockpiles increased by 500,000 barrels, undershooting hopes of a 1.1 million-barrel gain.

Traders said the market was boosted as cold weather in the US lifts demand for heating fuel.

"US crude has been support today by the colder weather, boosting heating oil demand," said Inenco analyst Lucy Sidebotham.

Winter-weary Americans were braced for another massive storm that is expected to dump as much as a foot of snow and a dangerous mix of freezing rain and sleet on a huge swath of the country.

The storm was set to reach the east coast on Wednesday, weather officials said.

"More winter storms set to hit the east coast of the United States appear to be giving a floor to US oil prices today as the prolonged cold snap continues to drive demand," said CMC Markets UK analyst Michael Hewson.

He added: "That said, it will take more than a few snow storms to push oil prices towards the $100 mark."

Prices also won modest support on Wednesday from the softer dollar.

The weaker greenback makes dollar-priced crude cheaper for buyers using stronger currencies. That tends to stimulate demand and push prices higher.

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© 2014 AFP

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