Oil prices rise as U.S. crude stocks build less than expected
Oil prices were up slightly on Thursday after the U.S. government reported a much smaller-than-anticipated rise in crude stocks, but gains were capped by worries about the spread of Coronavirus outside China.
U.S. Energy Information Administration (EIA) data showed crude inventories rose only 414,000 barrels last week, much less than the 2.5 million barrel build predicted.
However, scores of new coronavirus cases and a first death in South Korea fanned fears of global pandemic as research suggested it could be more contagious than previously thought.
Brent crude futures LCOc1 settled up 19 cents, or 0.32%, at $59.31 a barrel.
The front-month U.S. West Texas Intermediate (WTI) crude CLc1 futures contract, which expired Thursday, gained 49 cents, or 0.9%, to settle at $53.78 a barrel. The more-active second-month WTI benchmark CLc2 was up 45 cents, or 0.8%, at $53.94 a barrel.
Immediately after the EIA data, Brent front month, front month WTI and second month WTI touched their highest in February.
“Today’s fresh fundamental input mainly cantered on the weekly EIA release that was widely perceived as supportive,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
However, “negative vibes from the coronavirus are unlikely to dissipate quickly” and China’s efforts to prop up their economy via Central bank rate adjustments is a limited solution in reviving economic activity, Ritterbusch said.
China’s move to cut its benchmark lending rate eased some worries about slowing demand in the world’s second-biggest oil consumer and largest crude oil importer.
U.S. gasoline stockpiles fell by about 2 million barrels in the week to Feb. 14, while analysts had estimated an increase of 435,000 barrels, according to the EIA data.
The data also showed that U.S. East Coast refinery utilization rates fell last week to 59.2%, the lowest since November 2012. However, overall U.S. refinery utilization rates rose 1.4%, primarily as the refiners came out of maintenance.
Also supporting oil prices were U.S. sanctions this week on a trading unit of Russian oil giant Rosneft for its ties with Venezuela’s state-run PDVSA and conflict in Libya that has led to a blockade of its ports and oilfields.
Brent could extend gains to $60.22 a barrel, as suggested by its wave pattern and a projection analysis.
Brent crude futures for nearby delivery were also trading at a premium to future months, a structure called backwardation, signalling a potential tightening in supplies.