WTI futures hit 2-month high on bullish inventories report

West Texas Intermediate extended its movement above the $100 mark, hitting the highest level in more than two months, after the Energy Information Administration reported a fourth straight weekly decline in US crude inventories in the seven days to December 20. Brent surged to the strongest level in three weeks. The oil market continued to draw support by ongoing supply disruptions in South Sudan and Libya. A weaker dollar also underpinned prices.

On the New York Mercantile Exchange, WTI crude for delivery in February rose by 1.06% to $100.61 per barrel by 16:21 GMT. Prices shifted in a daily range between a two-month high of $100.67 and $99.37 a barrel. The US benchmark added 0.5% on Thursday and extended its weekly advance to over 1.4%.

Meanwhile on the ICE, Brent futures for settlement in February traded at $112.50 per barrel at 16:22 GMT, up 0.46% on the day. Prices touched a three-week high of $112.79 a barrel, while days low stood at $111.53. The European benchmark was mostly unchanged on Thursday and extended its weekly gain to 0.7% following Fridays advance.

US crude rose above the $100 mark for the first time in more than two months as the Energy Information Administration said that US crude inventories fell for a fourth straight week and outstripped analysts projections. US crude oil stockpiles decreased by 4.7 million to 367.6 million, exceeding the median estimate of 10 analysts surveyed by Bloomberg for a 2.65 million drop.

Inventories at Cushing, Oklahoma, the biggest US storage hub and delivery point for NYMEX-traded contracts, fell to 40.2 million barrels from 40.6 a week earlier.

US crude oil imports stood at 7.5 million bpd in the seven days through December 20, down by 197 000 from the previous period. Inbound shipments averaged 7.5 million bpd over the last four weeks, down 9.7% from a year earlier.

Refinery utilization jumped to 92.7%, up from 91.5% a week earlier. Both gasoline and distillate fuel production increased last week, averaging 9.7 and 5.1 million bpd.

Motor gasoline inventories fell by 0.6 million barrels last week, defying analysts projections for a 1.1 million increase, but were near the upper limit of the average range for this time of the year. Distillate fuel inventories decreased by 1.9 million barrels, surpassing forecasts for a 1 million drop, and were below the lower limit of the average range.

Upbeat US data

Oil prices continued to draw support by a recent series of upbeat US data, which strengthened demand prospects in the worlds biggest consumer.

The Department of Labor said yesterday that the number of people who applied for initial jobless benefits fell more than expected in the seven days to December 21, adding to a recent series of strong US numbers. Initial Jobless Claims declined to 338 000, outstripping analysts’ projections for a lesser drop to 345 000. The preceding period’s reading received an upward revision to 380 000, up from initially estimated at 379 000.

The Commerce Department reported on Tuesday that bookings for goods meant to last more than three years surged 3.5% in November, sharply exceeding projections for a 2.0% advance.

A separate report showed that purchases of new US homes surpassed analysts’ forecasts and remained near the highest level in five years, signaling the housing market retained momentum despite the rise in mortgage rates. New Homes Sales reached a 464 000 annualized pace, beating analysts’ projections for a drop to 435 000. October’s reading received an upward revision to 474 000, correcting the initial estimate of 444 000 homes sold.

On Monday, the final reading of the Thomson Reuters/University of Michigan consumer sentiment index confirmed the preliminary estimate and touched a five-month high of 82.5, despite trailing expectations for a rise to 83.0.

Christine Lagarde, the International Monetary Fund’s managing director, said last week the IMF is raising its outlook for the US economy as the reduction in Fed’s bond purchases and a budget deal in Washington eased concerns that the US economic growth might not be sustainable.

Supply concerns

Ongoing supply outages in Libya and South Sudan continued to support the market. Output in Libya, holder of Africas biggest crude reserves, remained at a mere 250 000 barrels per day after the Libyan government failed to reach an agreement with rebel leaders on reopening three main export terminals in the east, leaving a combined capacity of 600 000 bpd offline. Output is down from 1.4 million bpd in July.

Meanwhile in South Sudan, production remained impaired at 200 000 bpd, down by a fifth, after rebel forces loyal to former Vice President Riek Machar captured some oil wells in the Unity state, a crude-producing region, which led to a loss of capacity amounting to 45 000 barrels per day. Half of the capital of the main oil-producing region was also captured, but the army was reported to have defeated rebels in Malakal, the capital of major oil-producing Upper Nile state.

Olivier Jakob, an oil analyst at Petromatrix, said, cited by CNBC: “The risk on Libya has not changed and should be already priced in. South Sudan carries a risk of getting worse, but with about 220,000 bpd at risk it should not be enough to change the dynamics of the crude oil markets.”

Meanwhile in Europe, oil workers ended a strike at Totals last striking refinery in France, two weeks after four units were shut amid a pay dispute. This eased concern over supply of refined products, but should improve demand for crude.