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 U.S. crude oil stocks rose more than expected last week, but the
build was overshadowed by a sharp spike in gasoline demand,
according to U.S. Energy Information Administration data.
The data boosted U.S. gasoline and crude oil prices above key
technical levels, and pushed the closely watched and traded price
spread with Brent, the European benchmark, to the narrowest point in
nearly 7 months.
Investors continued to worry about the crisis in Ukraine, which has
severely strained relations between Moscow and Washington.
U.S. Secretary of State John Kerry telephoned Russian Foreign
Minister Sergei Lavrov twice after a senior U.S. diplomat said
earlier on Wednesday that Washington had no doubt Russians
instigated the separatist occupation of several government buildings
in eastern Ukraine this week.
"The geopolitical tension continues to hang over the (Brent)
market," said Bill Baruch, senior market strategist at iitrader.com.
In the U.S. crude market, "gasoline inventories showed a massive
drawdown, which drove WTI to rally past technical levels at
$102.75," pushing traders to buy back positions they may have sold
short, Baruch added.
U.S. RBOB gasoline settled nearly 3 cents higher at $3.0084 per
gallon.
U.S. oil rose as much as $1.21 to a session high of $103.77 a
barrel. The contract settled $1.04 higher at $103.60 per barrel.
Brent crude settled 31 cents higher at $107.98 a barrel.
The WTI-Brent <CL-LCO1=R> spread narrowed by 73 cents to settle at
$4.38, the tightest settlement since Sept. 19.
Brent prices were not affected by the potential for a rebound in
Libyan oil exports as the country's oil protection force said it had
not regained full control of the Zueitina port. The government had
announced a deal with rebels to end the blockade of eastern oil
terminals earlier this week.
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The port, along with the country's two largest, Es Sider and Ras
Lanuf, has been under the control of an eastern federalist group led
by former guard member Ibrahim al-Jathran, who recruited men from
within his ranks.
U.S. crude inventories rose by 4 million barrels in the week to
April 4, data from the Energy Information Administration (EIA)
showed, compared with analysts' expectations for an increase of 1.3
million barrels.
But analysts were focused on the steeper-than-expected fall in
gasoline stocks, which they said added to evidence of a broad
economic recovery and robust demand as the summer driving season
gets started.
Gasoline stocks fell by 5.2 million barrels, dwarfing the
729,000-barrel-draw that was expected.
"The gasoline demand is jaw dropping. Here we are in the first week
of April and gasoline demand is pretty strong," said Carl Larry of
consultancy Oil Outlooks.
"The more jobs we've seen created, the more people back to work has
really driven gasoline demand back up."
(Additional reporting by Peg
Mackey in London and Manash Goswami in Singapore; editing by Jane
Baird, David Evans, Tom Brown, Nick Zieminski and Andre Grenon)
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