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 U.S. crude oil erased earlier gains but still ended higher on upbeat
economic data and expectations that supplies would continue to drain
from the benchmark delivery point for the U.S. oil futures contract.
Preliminary estimates for weekly data show a decline of more than 1
million barrels at Cushing, Oklahoma, where oil is delivered against
the New York Mercantile Exchange oil futures contract, according to
traders and brokers who cited data from energy intelligence group
Genscape.
The Cushing estimate drove the spread between the global benchmark
Brent and U.S. oil <CL-LCO1=R> to narrow to nearly $7, a five-month
low, but settled 17 cents wider at $7.82.
"The longs came in and tried to drive the market higher," said Gene
McGillian, analyst at Tradition Energy in Stamford, Connecticut. "We
failed to attract another wave of buying and that's why you saw some
people bail out before the end of the day."
Brent crude settled 79 cents higher at $110.64 a barrel, extending
gains for a second straight week. U.S. oil was up 62 cents to
$102.82, after climbing more than $1 earlier in the session.
U.S. oil garnered support from gains in the U.S. stock market. The
S&P 500 turned positive for the year and the Nasdaq hit a 14-year
high.
Oil also drew support from a partial closure of the lower
Mississippi River, including the Port of New Orleans, as crews
cleaned up oil that spilled when a barge was hit by another vessel.
The closure may delay some deliveries.
Both contracts were off their highs reached last week when they were
supported, in part, by cold weather in the U.S. which boosted demand
for distillates, which include heating oil.
Oil demand tracks global economic growth closely and markets found
support on Monday from a ream of sound global economic indicators.
The world's top economies have targeted a goal of generating more
than $2 trillion in additional output over five years while creating
millions of new jobs.
German business morale rose in February to its highest since July
2011, suggesting Europe's largest economy will grow faster in the
first quarter after expanding only modestly last year.
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LIBYA, SUDAN SUPPORT
Brent oil drew support from continued unrest in Libya and South
Sudan that has cut into exports.
Libyan production plunged further over the weekend, falling to
230,000 barrels per day (bpd) on Sunday after a new protest shut the
El Sharara field. The government initiated spending caps Monday as
some ministries struggled to pay their bills.
Before nationwide protests began last summer, Libyan oil production
was closer to 1.4 million bpd.
South Sudan's oil production has fallen to about a third of its
capacity at 170,000 bpd. The capital of the main oil-producing Upper
Nile region, Malakal, remains divided between the army and rebels,
government officials say.
On Saturday, the national government over-ruled Upper Nile state's
plan to partially shut down oil production and evacuate foreign
workers after the rebel offensive.
U.S. oil was less affected by global supply interruptions as mounds
of light, sweet oil pool in the Gulf Coast refining center, forcing
less reliance on imports.
(Additonal reporting by Shadi Bushra
in London and Manash Goswami in Singapore; editing by Meredith Mazzilli, Chris Reese, Bernadette Baum and Diane Craft)
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