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 TransCanada Corp said it has begun to ship crude oil on its 700,000
barrel per day (bpd) pipeline, which flows from Cushing, Oklahoma,
the pricing point for the New York Mercantile Exchange's West Texas
Intermediate (WTI) contract, to Gulf Coast refiners. The company
expects to transport an average 525,000 bpd in the first year of
service.
"As they work up toward full capacity and the market begins to
adjust to the additional supply of the refining centers, then we're
going to see a narrowing between WTI and Brent," said Joseph Arsenio,
owner of Arsenio Capital Management in Larkspur, California.
U.S. oil's discount to Brent narrowed to $11 in intra-day trade
before tightening by 22 cents to settle at $11.54, the smallest
discount since Dec. 19.
Brent oil for March settled up $1.54 at $108.27 per barrel, the
highest settlement since Dec. 31. U.S. crude oil futures rose $1.76
to settle at $96.73, also the highest settlement since the last day
of 2013.
Brent got an additional boost from the International Monetary Fund (IMF),
which predicted higher growth in advanced economies, while China's
central bank injected liquidity into money markets to ease
bank-to-bank lending in the world's second-largest oil consumer.
DISTILLATES IN DEMAND
Oil prices were also helped by the bitterly cold weather that sent
U.S. natural gas prices to a 2-1/2-year high, traders and brokers
said.
U.S. RBOB gasoline futures settled 5.36 cents higher at $2.6771 per
gallon, a penny less than the 100-day moving average of $2.6808.
Ultra low-sulfur diesel futures (ULSD), commonly known as heating
oil, rose 2.32 cents to settle at $3.0379, after a steep rise on
Tuesday.
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Oil pared gains after the American Petroleum Institute weekly report
showed a whopping 4.9 million-barrel build in oil stocks compared
with a 600,000 barrel rise forecast in the Reuters poll.
Distillates fell 2.3 million barrels, API data showed.
Analysts anticipated a 900,000-barrel drop in distillate stocks,
including heating oil and diesel fuel, while gasoline stocks were
expected to have risen 2.1 million barrels, according to a Reuters
poll.
The U.S Energy Information Association will release its weekly
inventory data on Thursday at 11 a.m. EST (1600 GMT), delayed a day
due to the Martin Luther King Jr Day holiday on Monday.
(Additional reporting by Ron Bousso
in London, Manash Goswami in Singapore; editing by Jane Baird,
Keiron Henderson, Sophie Hares and Marguerita Choy and Matthew
Lewis)
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