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Crude oil futures rose for a third straight day on Wednesday, helped by larger than expected declines in U.S. gasoline and distillate inventories, while natural gas prices settled at the lowest level in more than three years.
The U.S. Energy Information Administration reported domestic gasoline stocks fell by 3.15M barrels last week and distillate stocks dropped by 3.2M barrels, compared with respective estimates for a 140K-barrel build and a 1M-barrel draw.
The draws to product stocks are supporting crack spreads – the price difference between crude oil and petroleum products – which “indicate higher fuel prices and stronger crude demand in the coming weeks once maintenance is completed,” DTN analyst Troy Vincent told MarketWatch.
Meanwhile, crude stocks increased by a larger than expected 5.5M barrels as production recovered after a cold snap and a sharp drop in refining in the Midwest likely due to the power outage and shutdown of BP’s oil refinery in Whiting, Indiana.
Front-month Nymex crude (CL1:COM) for March delivery ended +0.7% to $73.86/bbl, and front-month April Brent crude (CO1:COM) closed +0.8% to $79.21/bbl, the third consecutive gain for both benchmarks.
Meanwhile, Nymex natural gas for March delivery (NG!:COM) tumbled below the $2 mark to settle -2.1% to $1.967/MMBtu, the lowest settlement for the front month since September 2020, as the market remains bearish about mild near-term weather forecasts.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)
Crude oil is up ~3% YTD, with the Middle East war premium and rising transport costs largely offset by a mixed global economic outlook, but the lackluster moves are masking a boom in oil derivatives trading, with Bloomberg reporting aggregate open interest across the main futures contracts rising to the highest since March 2022.