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 Industry weekly inventory data showed a much smaller-than-expected
draw in distillates stocks, including heating oil, according to the
American Petroleum Institute's weekly inventory report. Cushing fell
by 1.8 million barrels, the data showed.
The market shrugged off the API data as traders looked to the Energy
Information Administration's report to be released Thursday at 11
a.m. EST (1600 GMT).
The cold weather forecasts sent heating oil prices soaring to near
three-week highs ahead of the settlement, as U.S. crude rallied to a
fresh four-month high.
Brent ended the day flat as traders weighed concerns of tighter
global supply that could be triggered if the violent protests in
Venezuela exacerbate already reduced output from Libya and South
Sudan.
"The market continues to be supported by oil demand led by heating
oil, but we're also seeing supply issues from Libya and there is
concern about the violence in Venezuela," said Andy Lipow, president
of Lipow Oil Associates in Houston.
U.S ultra-low sulfur diesel (ULSD), commonly known as heating oil,
rose by nearly 5 cents to settle at $3.1468 per gallon.
Boosted by heating oil, U.S. crude settled 88 cents higher at
$103.31 a barrel. The American benchmark rose to a session high of
$103.80 a barrel, its highest since Oct. 8. The contract expires on
Thursday.
Looking ahead, U.S. crude oil for April settled 74 cents higher at
$102.84 per barrel. The April contract widened its premium over May
U.S. crude oil by as much as 26 cents to an intra-day high of $1.15.
The backward-dated spread settled at a five-month high at $1.03.
Brent crude rose just 1 cent to end the day at $110.47 a barrel, its
highest settlement level this year.
The Brent-U.S. crude price spread contracted to $7.37 <CL-LCO1=R>,
its tightest point since Oct. 10, having traded as wide as $15.51 in
January.
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RISK WATCH
Traders are closely watching political tensions across the globe
that may weigh on oil supply.
In Venezuela, a fifth person died Wednesday in protests that were
set off by the arrest of Leopoldo Lopez, a Harvard-educated
economist who led demonstrations against the president.
Supply is still disrupted in Africa. Libya announced its oil output
is down at 375,000 barrels per day on Tuesday, the same day South
Sudanese rebels announced they seized control of the capital of a
major oil producing state.
Six world powers and Iran worked through a second day of talks in
Vienna on Tehran's contested nuclear program, seeking to close a
vast gap in expectations about what a final agreement should look
like.
(Additional reporting by Simon Falush
in London and Florence Tan in Singapore; editing by Anthony Barker,
David Gregorio, Marguerita Choy and Chizu Nomiyama)
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