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 U.S. gasoline and ultra low-sulfur diesel (ULSD), more commonly
known as heating oil, futures both rose to more than three-month
highs in intraday trading as large French refineries remained
offline due to strikes.
While U.S. crude stocks unexpectedly rose last week, refineries
boosted output and distillate and gasoline stockpiles fell, a report
from industry group the American Petroleum Institute said late on
Tuesday, indicating strong demand for oil products, including
exports.
"Seasonally, this is the time of year when gasoline and heating oil
are in the middle of their rally," said Bill Baruch, senior market
strategist at iitrader.com in Chicago.
Supply disruptions in Africa supported Brent while the rise in U.S.
crude stockpiles capped gains in U.S. benchmark West Texas
Intermediate (WTI).
Brent crude settled 8 cents higher at $111.98 a barrel, after
touching an intraday high of $112.12, the highest since Dec. 5.
U.S. crude ended 33 cents higher at $99.55 per barrel, trading fully
above the 200-day moving average of $98.92 for the whole session for
the first time in two months. A settlement above $99.50 likely means
prices have further to rise, some technical analysts said. Both
markets were shut for Christmas on Wednesday.
Other analysts expect the price to ease longer term as refiners
enter maintenance at the end of next month, reducing demand for
crude as production rises.
"With rising North Dakota and Texas oil production, I think that WTI
is a little on the high side," said Kyle Cooper, director of
research with IAF Advisors in Houston.
The spread between the two benchmarks <CL-LCO1=R> has steadied
around $12.50 per barrel for the last four sessions in thin holiday
trade. It settled at $12.43, narrowing by 25 cents from the previous
session.
U.S. gasoline futures touched $2.8463 per gallon, their highest
level since Sept. 9, before easing to settle less than one cent
higher at $2.82. ULSD futures traded to their highest level since
Sept. 16 at $3.1085 per gallon, settling 1.65 cents up at $3.0948.
Rich refining margins are prompting U.S. refiners to make oil
products. The crack, or difference, between U.S. crude oil futures
and gasoline <CL-RB1=R> continued to widen on Thursday, hitting a
four-week high of $19.72 per barrel. The price ultimately narrowed
by 26 cents from the previous session to settle at $18.68.
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Traders will next look to the U.S. government's Energy Information
Administration report to gauge supply and demand. The data is due on
Dec. 27 at 11:00 a.m. EST, delayed from its usual Wednesday release
by the Christmas holiday.
U.S. crude also drew support from jobs data showing the number of
Americans filing new claims for unemployment benefits fell last week
to the lowest level in nearly a month, a hopeful sign for the labor
market in the world's top oil consumer.
In Europe, workers extended a strike over pay at two French
refineries, while lifting action at a third plant. A majority of
workers at the 247,000 barrel-per-day Gonfreville refinery, Total's
largest in France, and at the 153,000-bpd La Mede refinery voted to
extend their action, union officials said.
The strikes, in addition to poor refinery margins, have weighed on
European crude demand, say analysts.
Supply outages in Africa are also in focus and added some
geopolitical risk premium to prices. The government in South Sudan,
which is threatened by civil war, has shut 45,000 bpd of production.
Rebels in the nation have seized some oil wells and may damage them.
Export terminals remain closed in Libya, where output is one-quarter
of the 1 million bpd it pumped in July. Tribal leaders will hold
more talks on reopening ports in eastern Libya but the government
will not negotiate with protesters blocking them, the prime minister
said.
(Reporting by Alex Lawler in London and
Florence Tan in Singapore; editing by Marguerita Choy and Chizu
Nomiyama)
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