Oil futures advance amid severe U.S. cold snap
London (Feb 5) Oil futures advanced on Wednesday following an industry report that showed a smaller-than-expected rise in U.S. crude supplies last week, while the extremely cold weather in the U.S. has also bolstered demand for the heating fuel.
March crude oil gained 90 cents, or 0.9%, to $98.09 a barrel in electronic trading.
The American Petroleum Institute (API), an industry group, reported later Tuesday that U.S. crude stockpiles rose 384,000 barrels for the week that ended Jan. 31. It was much smaller than the 1.5 million-barrel build forecast by analysts in a Platts survey. Meanwhile, stockpiles at Cushing, Oklahoma dropped 1.6 million barrels, API data showed. Cushing is the delivery point for the NYMEX crude oil contracts.
The more-closely-watched oil report from the U.S. Energy Information Administration is due out Wednesday at 10:30 a.m. Eastern Time.
The API report also showed a decline of 1.5 million barrels in distillate fuel supplies for last week, which was mainly due to “the cold weather conditions” in the U.S., said ICICI Bank analysts in a note on Wednesday.
The winter storms sweeping the U.S. have sent temperatures below freezing in many parts of the country and boosted the consumption of heating fuel.
After a big rally in the previous session, March natural gas gave up some gains in electronic trading on Wednesday, with prices down 1 cent, or 0.2%, to $5.37 per million British thermal units. Prices on Tuesday jumped 47 cents, or 9.6%, to close at $5.375 per million British thermal units on the New York Mercantile Exchange.
Citi Futures analyst Timothy Evans estimated that the U.S. natural gas supplies could see a substantial net withdrawal of 258 billion cubic feet for last week, much higher than the net withdrawal of 129 billion cubic feet in the same week a year ago.
Meanwhile, Brent crude oil for March delivery rose 46 cents, or 0.4%, to $106.24 a barrel.
Among other energy trading, March heating oil gained 2 cents, or 0.7%, to $3.00 a gallon, and March gasoline rose 2 cent, or 0.6%, to $2.62 a gallon.