Stockpiles of distillates, that include heating oil, fell last week
by 2.4 million barrels, nearly double what analysts expected,
according to the data from the U.S. Energy Information
In the heavily populated U.S. East Coast, which has been repeatedly
hit with snow in recent weeks, distillate stocks dropped in the week
to Jan. 31 to their lowest levels since April 2003.
The data also showed that crude stocks at Cushing, Oklahoma, from
where the southern leg of TransCanada Corp's Keystone pipeline began
draining oil to send to the Gulf Coast, fell by 1.6 million barrels.
The draw at Cushing is supportive for U.S. crude oil prices because
it relieves a supply glut that has depressed prices over the last
three years. This was the first week since TransCanada's pipeline
started up that weekly data showed a reduction in stocks at Cushing.
The draw was anticipated, but it drove U.S. crude higher earlier in
the session, narrowing its discount to Brent to the tightest in
nearly four months.
"I think the Cushing number was baked into the cake — people
expected it," said Matt Smith, analyst at Schneider Electric in
Louisville, Kentucky. "We are seeing the lag in the Brent-WTI spread
because of the Cushing draw" and profit taking.
U.S. crude's discount to Brent <CL-LCO1=R> tightened to $7.94 per
barrel on Wednesday, the narrowest point since Oct. 10. It settled
28 cents wider from the previous session at $8.87.
Brent crude rose 47 cents to $106.25 per barrel after three straight
sessions of losses. U.S. crude rose 19 cents to $97.38.
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U.S. ultra-low sulfur diesel (ULSD), commonly known as heating oil,
settled 1.39 cents higher at $2.9968 per gallon, after rising to a
session high of $3.0149.
U.S. RBOB gasoline futures settled up 3.82 cents or 1.47 percent at
$2.6413 per gallon, after EIA data showed a much smaller than
expected build in stocks.
EIA data also showed a smaller-than-expected build of crude oil of
Demand for distillates fell slightly on the expectation that winter
weather will finally moderate and curb demand for heating fuels.
(Additional reporting by Alex Lawler,
Florence Tan and Simon Falush; editing by William Hardy, Jane Baird, Marguerita Choy and Chris Reese)
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