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Oil rises, supported by US fuel stock draws but weighed by crude build
[NEW YORK] Oil prices rose about 1 per cent on Thursday after draws in US fuel inventories, but gains were capped by a larger-than-expected rise in crude stockpiles and a series of weak economic figures.
Global benchmark Brent crude rose 49 cents, or 0.8 per cent, to settle at US$59.91 a barrel. US WTI crude gained 57 cents, or 1.1 per cent, to settle at US$53.93 a barrel.
US petrol stocks fell by 2.6 million barrels in the week to Oct 11, while distillate stockpiles, which include diesel and heating oil, fell by 3.8 million barrels, the US Energy Information Administration said on Thursday.
But a soaring rise in crude inventories offset the draws. Crude stocks rose by 9.3 million barrels, far surpassing estimates for a build of 2.8 million barrels.
The rise was the result of a reduction in refining output for the week to its lowest capacity use nationwide since Hurricane Harvey in September 2017. Refining capacity use fell to 83.1 per cent as refiners shut in capacity across the country.
"This is generally a bullish report," said Phil Flynn, senior energy analyst at Price Futures Group in Chicago. "Part of the problem for the build is that refineries are not running. Refinery runs fell down, which is a concern."
Overall imports have fallen, in part due to sanctions imposed on Chinese shipping firm COSCO that have raised freight costs.
The United States imposed sanctions on COSCO Shipping Tanker (Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co for allegedly carrying Iranian oil.
Adding to concerns about the global economy, and therefore energy demand, US retail sales fell for the first time in seven months, while housing starts and industrial output dropped as well. Earlier data showed a moderation in job growth and services sector activity.
"If we see more indications of slowing demand, I think the market is going to continue to sink lower," said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
Brexit developments gave oil prices some support. European Union leaders gave their unanimous backing to a Brexit deal with Britain on Thursday, putting the onus on Prime Minister Boris Johnson to secure the British parliament's approval for the deal in a vote in two days.
Analysts have said any agreement that avoids a no-deal Brexit should boost economic growth and oil demand.