Oil Rises As Cold Weather Seen Affecting Stockpiles

West Texas Intermediate crude rose for a second day following speculation a U.S. government report will show distillate inventories fell amid colder weather in the country, the world’s biggest oil consumer.

Futures climbed as much as 1.1 percent in New York. Distillate supplies, including heating oil and diesel, probably shrank by 2.5 million barrels to 113.7 million last week, according to a Bloomberg News survey before data from the Energy Information Administration today. An industry report yesterday showed stockpiles dropped 1.46 million. A second winter storm this week is moving into the U.S. Northeast. Brent crude’s premium to WTI dropped below $8 a barrel.

“The U.S. winter is keeping levels high because of the increase in demand,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “There are still some very chilly places. Once we get the winter behind us I’m looking for prices to drift lower as milder weather approaches.”

WTI for March delivery increased as much as $1.07 to $98.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.95 as of 1:50 p.m. London time. The contract gained 0.8 percent to $97.19 yesterday, halting a two-day loss. The volume of all futures traded was about 16 percent below the 100-day average.

via Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza