Crude futures open at highest in 3 months on positive economic data
By Cassie Werber
LONDON--Crude-oil futures opened at the highest point in three months in London Friday, as modestly positive data allowed the market to break out of its recent range.
At 1005 GMT, the front-month March Brent contract on London's ICE futures exchange was up 5 cents at $113.33 a barrel.
The front-month March light, sweet crude contract on the New York Mercantile Exchange was trading 38 cents higher at $96.33 a barrel.
Data Thursday evening from the U.S. Department of Energy showed a "bigger than expected build in crude weekly inventories," wrote analysts at Capital Spreads. However, this didn't depress the price of U.S. crude, and WTI prices climbed 44 cents during U.S. trading Thursday to reach $95.90 a barrel.
The gains were based on data showing that the U.S. and China had "both displayed strong economic results lately," Capital Spreads noted.
The Schork Report, however, pointed out that less crude is being refined into products, potentially adding to the glut.
"Refinery utilization rates plunged by 430 bps to 83.6%. That is the lowest low since last winter's turnaround-season and is a pretty good reminder that crude oil demand will continue to pace lower in the weeks ahead as this season's turnarounds kick into gear," Schork said.
The outlook for the next few weeks isn't particularly positive, the report said, predicting that increased pipeline capacity wouldn't solve all the problems: "Seaway expansion notwithstanding, refinery turnarounds, plus rising production of Canadian oil sands and Bakken shale will compete to keep pipelines congested in the first quarter."
"The short-term uptrend on Brent remains intact, even though we still believe that fundamentally there are few reasons to rally at the moment," wrote Andrey Kryuchenkov at VTB Capital. In a note to clients he said that global risk appetite is set to dictate direction on Friday, adding that some pre-weekend profit taking is still possible.
The ICE's gasoil contract for February delivery is down $1.75 at $974.25 a metric ton, while Nymex gasoline for February delivery is down 87 points at 2.8542 cents a gallon.