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Feb. 20, 2020, 3:14 p.m. EST

Oil futures end higher as U.S. crude supplies post a smaller-than-expected weekly climb

Concerns about oil demand ease as China makes move to boost economy in wake of COVID-19

By Myra P. Saefong and William Watts, MarketWatch


Bloomberg

Oil futures finished higher on Thursday, buoyed by a smaller-than-expected weekly increase in U.S. crude supplies.

Prices were already moving up ahead of the supply data, partly on the back of expectations that efforts by China to stimulate the economy will blunt the hit to crude demand from the country’s COVID-19 outbreak. The prospect of a further squeeze on Venezuelan oil exports has also supported prices.

U.S. benchmark West Texas Intermediate crude for March delivery  on the New York Mercantile Exchange rose 49 cents, or 0.9%, to end at $53.78 a barrel on the New York Mercantile Exchange, with the contract expiring at the settlement. It marked its highest settlement since Jan. 24, according to Dow Jones Market Data. April WTI crude , which is now the front-month contract, settled at $53.88, up 39 cents, or 0.7%. 

On ICE Futures Europe, global benchmark April Brent crude rose 19 cents, or 0.3%, to $59.31 a barrel, for the highest front-month contract finish since Jan. 29.

The Energy Information Administration reported Thursday that U.S. crude supplies edged up by 400,000 barrels for the week ended Feb. 14. Supply data were delayed by a day this week because of Monday’s Presidents Day holiday.

Analysts polled by S&P Global Platts expected the data, to show a rise of 3.3 million barrels. The American Petroleum Institute on Wednesday reported a climb of 4.2 million barrels, according to sources.

“A solid tick higher in refining activity and a firm drop in net imports has resulted in minor build to crude stocks,” Matt Smith, director of commodity research at ClipperData, told MarketWatch. The “lesser build than expected, combined with draws to the products,” provided further encouragement for the day’s rally.

The EIA data also showed a supply decline of 2 million barrels for gasoline, while distillate stocks fell by 600,000 barrels. The S&P Global Platts survey had shown expectations for an increase of 300,000 barrels for gasoline supplies, but distillates were forecast to fall by 1.6 million barrels.

On Nymex Thursday, March gasoline  rose 0.4% to $1.6697 a gallon, while March heating  edged down 0.5% to $1.6976 a gallon.

Meanwhile, the market also found support “in still-growing optimism over a soon to be felt increase on Chinese economic activity and the prospect of Venezuelan export constraints increasing after Rosneft’s trading arm saw additional sanctions being imposed by the U.S. government,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a note.

In a move to boost the Chinese economy, the central bank on Wednesday cut its loan prime rate. On Tuesday, the Trump administration announced sanctions on Rosneft Trading S.A., a unit of Rosneft Oil Co. over its operations in Venezuela.

Also on Nymex, prices for natural-gas futures turned higher after the EIA on Thursday reported that domestic supplies of natural gas fell by 151 billion cubic feet for the week ended Feb. 14. That was generally in line with the 150 bcf decline forecast by analysts at The Price Futures Group.

March natural gas  rose 5.4 cents, or 2.8%, to $2.009 per million British thermal units. Prices were on track to tally their highest finish since mid-January.

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