Oil futures settle higher; distillate markets lead charge upward
London (Platts)--27Mar2013/453 pm EDT/2053 GMT
Distillate futures closed US trading sharply higher Wednesday, holding
onto boosts seen in the wake of an unexpectedly bullish inventory report
released in the morning by the Energy Information Administration.
NYMEX April heating oil settled up 3.41 cents at $2.9154/gal, while the
May contract closed trade 3.80 cents higher at $3.0368/gal. Front-month
heating oil expires at the close of US trade on Thursday.
ICE April gasoil was up $14/mt at $916/mt at the time of the 2:30 p.m.
EDT (1830 GMT) NYMEX market settle.
The climb in distillates outpaced movements in crude: NYMEX May crude
closed 24 cents higher at $96.58/b after bouncing back from an overnight
retreat during afternoon trade.
ICE May Brent settled up 33 cents at $109.69/gal.
NYMEX April RBOB closed US trade 49 points higher at $3.1155/gal.
Both distillate contracts jumped following the release of the EIA's
weekly fuel inventory report, which showed an unexpectedly large 4.5
million barrel plunge in US distillate stocks as implied demand ticked
sharply upward.
"The latest draw [in distillate stocks] was driven by strong implied
demand caused in part by cold weather and reinforced by lower refinery
production and only partly offset by higher net imports," analysts from
BNP Paribas said in a note.
"Stocks on the important East Coast [home of the New York
Harbor-delivered NYMEX heating oil contract] drew by 1.3 million barrels
and remain 30% below a year ago."
US distillate inventories are now at their lowest level since the week
ended November 30.
Front-month Brent's premium to NYMEX crude widened to $13.11/b at 2:30
p.m. EDT, retreating from the intraday low of $12.53/b seen Tuesday.
The EIA reported a 3.256 million-barrel build in domestic crude
inventories, and a 439,000-barrel jump in stocks at Cushing, Oklahoma,
delivery point for the NYMEX crude contract.
The US dollar index hit a near 8-month high during US trade on
Wednesday, as the euro fell below the 1.28 mark for the first time since
November 21 and held. At 2:30 p.m. EDT, the dollar index was up 0.40% at
83.210.
"The situation in Cyprus is going to be rough for a long time to come,"
John Kilduff, of Again Capital, said in a note. "It may not be related,
but Italy had a difficult bond auction this morning, feeling the heat
over their political disarray. The troubles for Europe just won't go
away."
The UK's Office of National Statistics released another estimate of Q4
2012 GDP, showing a decrease of 0.3% between the third and fourth
quarter, unrevised from the previous estimate. The ONS attributed the
decrease in GDP to a fall in gross capital formation and a GBP6 billion
net trade deficit.
US equities markets retreated sharply in US morning trade after a
largely negative European session, though they rebounded somewhat during
the afternoon. The Dow Jones Industrial Average was down 0.19% at
14,532.2 at 2:30 p.m. EDT, while the S&P 500 was 0.09% lower at
1,562.35.
--Paula VanLaningham,
paula_vanlaningham@platts.com
--Edited by Katharine Fraser,
katharine_fraser@platts.com
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