U.S. crude-oil futures rose in electronic trade Wednesday, extending gains made the previous day as weekly inventories showed a surprise drop, but the moves were muted ahead of more key data
Crude oil for April delivery rose 18 cents, or 0.2%, to $92.72 a barrel during East Asia trading hours. The move added to the contract’s 48-cent advance Tuesday on the New York Mercantile Exchange amid optimism about the U.S. energy-demand outlook.
But London-traded Brent crude for April delivery lost 19 cents, or 0.2%, to trade at $109.46 a barrel, carrying on from a 57-cent drop Tuesday and further narrowing its spread against Nymex crude.
The weekly U.S. inventory report from the American Petroleum Institute, issued after Tuesday’s close, helped drive the gains for Nymex crude.
The API data showed a 1.4-million-barrel drop in crude supplies,, compared with expectations for a 2.3-million-barrel climb tipped in a Platts survey of analysts.
Nymex oil futures could run yet higher if the API numbers are confirmed in the more closely watched U.S. Energy Information Administration weekly report, due out Wednesday at 10:30 a.m. U.S. Eastern time.
But analysts at Citi Futures, who have been generally bearish on crude, said the drop in inventories seen in the API report may have limited significance in the larger supply-demand picture.
“Any decline in U.S. crude stocks would represent a supportive swing after the prior seven consecutive [weekly] builds, but this would likely prove an interruption to the larger seasonal uptrend rather than a more material shift,” they wrote late Tuesday, following the API report.
Meanwhile, a mild decline for the U.S. dollar also added to support for oil prices, with the ICE dollar index slipping to 82.485 from 82.585 late Tuesday. A weaker dollar makes dollar-denominated crude less expensive for holders of other currencies, which can in turn send prices higher.
And while the API and EIA reports shine a spotlight on supplies, demand will also be in focus later Wednesday as the International Energy Agency is due to give its monthly oil report.
On Tuesday, the Organization of the Petroleum Exporting Countries published its monthly report, leaving its global-demand forecast unchanged, though it cut the projected demand for OPEC oil.
Looking at the U.S. fundamentals, Citi Futures said the market was overestimating demand, citing a Department of Energy report showing fourth-quarter U.S. consumption declining 2.3% from a year earlier.
“Those buying oil on the faith that a rising S&P 500 and positive U.S. GDP will translate into stronger demand and a tighter market are overlooking the actual decline in U.S. demand,” they said.
Elsewhere in the energy complex, futures traded mostly higher, getting a bump from the API numbers, which also showed larger-than-expected decreases in gasoline and distillate inventories.
As a result, April gasoline advanced 2 cents, or 0.6%, to $3.17 a gallon, while April heating oil added a penny, or 0.2%, to $2.95 a gallon.
April natural gas , meanwhile, held steady at $3.65 per million British thermal units.