WTI futures hold above the $100 mark as US inventories fall, African supply disruptions continue

West Texas Intermediate hovered near the highest level in 2-1/2 months on Monday after a government report released on Friday showed US crude inventories fell for a fourth straight week to the lowest since September in the seven days through December 20. A recent series of upbeat economic data from the US continued to boost demand prospects in the worlds top consumer. The oil market, mainly the Brent benchmark, kept drawing support by ongoing supply disruptions in Libya and South Sudan. Also lifting prices, workers ended a walkout at all of Totals striking refineries in France, boosting demand prospects for crude.

On the New York Mercantile Exchange, WTI crude for settlement in February traded at $100.28 per barrel at 8:33 GMT, down 0.04% on the day. Prices shifted in a daily range between $100.43, near Fridays 2-1/2 month high of $100.75, and $100.14 a barrel. The US benchmark added 0.4% on Friday and settled the week nearly 1% higher after it gained 2.8% in the preceding five days. The contract is up 9.3% this year and is set for a fourth annual advance in five.

Meanwhile on the ICE, Brent futures for delivery in February rose by 0.16% to $112.36 per barrel by 8:33 GMT and shifted between session high of $112.63, near Fridays 3-1/2 week high, and days low of $112.05 a barrel. The European benchmark added 0.1% on Friday and settled the week 0.3% higher, narrowing the spread to its US counterpart for a third day to $11.86. Prices are up 1.1% this year.

US crude rose above the $100 mark for the first time in more than two months on Friday and held firmly above it on Monday as the Energy Information Administration reported that US crude inventories fell for a fourth straight week and outstripped analysts’ projections in the seven days to December 20. 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 to 219.9 million, 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 to 114.1 million, surpassing forecasts for a 1 million drop, and were below the lower limit of the average range. Demand for gasoline rose by 1.8% to 9.18 million bpd, while consumption of distillate fuel jumped 2% to 4.17 million barrels per day.

Ric Spooner, a chief analyst at CMC Markets in Sydney, said, cited by Bloomberg: “We saw some strength on West Texas based on the better-than-expected figures from the EIA. There’s potential for the market to rally further if it gets more good news. The U.S. may see further improvement in economic statistics in the next few weeks.”

Meanwhile, a Bloomberg survey of analysts showed that Brent will drop next year due to the shale oil boom in the US and receding supply threats in Africa and the Middle East. The median estimate of seven analysts who participated in the poll called for a decline to $105 a barrel, down from $108.70 in 2013.

African supply outages

Civil unrest in South Sudan and Libya continued to underpin the market. Oil security guards threatened to block a gas pipeline to Tripoli, escalating a wave of strikes which shut off Libyas main oilfields and export terminals and reduced output to 250 000 bpd, a fraction of Julys 1.4 million bpd production pace.

In South Sudan, the countrys army continued to fight ethnic militias over the weekend despite an offer of truce to end the conflict last week, bringing to total number of deaths to over 1 000 people. Production has fallen to 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.

In France, workers voted to end the strike at Total’s last striking refinery on Friday, putting an end to a two-week walkout and easing concern over refined products tightness. Output had fallen to less than a half of the countrys refining capacity.

Also providing some temporary support, production at Brazils Marlim field, one of the largest, fell by 22 000 bpd after a fire at an offshore platform operated by Petroleo Brasileiro SA injured two workers.

Investors will also be watching closely the outcome of expert talks between Iran and six world powers which resume on Monday, aiming to resolve technical issues on implementing last months groundbreaking deal to curb Irans disputed nuclear program.