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Oil prices rise as US crude stocks build less than expected
[BENGALURU] Oil prices were up slightly on Thursday after the US government reported a much smaller-than-anticipated rise in crude stocks, but gains were capped by worries about the spread of coronavirus outside China.
US Energy Information Administration (EIA) data showed crude inventories rose only 414,000 barrels last week, much less than the 2.5 million barrel build predicted by analysts in a Reuters poll.
However, scores of new coronavirus cases and a first death in South Korea fanned fears of global pandemic as research suggested it could be more contagious than previously thought.
Brent crude futures settled up 19 cents, or 0.32 per cent, at US$59.31 a barrel.
The front-month US West Texas Intermediate (WTI) crude futures contract, which expired on Thursday, gained 49 cents, or 0.9 per cent, to settle at US$53.78 a barrel. The more-active second-month WTI benchmark was up 45 cents, or 0.8 per cent, at US$53.94 a barrel.
Immediately after the EIA data, Brent front month, front month WTI and second month WTI touched their highest in February.
"Today's fresh fundamental input mainly centered on the weekly EIA release that was widely perceived as supportive," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
However, "negative vibes from the coronavirus are unlikely to dissipate quickly" and China's efforts to prop up their economy via Central bank rate adjustments is a limited solution in reviving economic activity, Mr Ritterbusch said.
China's move to cut its benchmark lending rate eased some worries about slowing demand in the world's second-biggest oil consumer and largest crude oil importer.
US petrol stockpiles fell by about 2 million barrels in the week to Feb 14, while analysts had estimated an increase of 435,000 barrels, according to the EIA data.
The data also showed that US East Coast refinery utilisation rates fell last week to 59.2 per cent, the lowest since November 2012. However, overall US refinery utilisation rates rose 1.4 per cent, primarily as the refiners came out of maintenance.
Also supporting oil prices were US sanctions this week on a trading unit of Russian oil giant Rosneft for its ties with Venezuela's state-run PDVSA and conflict in Libya that has led to a blockade of its ports and oilfields.
Brent could extend gains to US$60.22 a barrel, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.
Brent crude futures for nearby delivery were also trading at a premium to future months, a structure called backwardation, signalling a potential tightening in supplies.