Futures Movers: Oil rebounds to end higher as inventory report shows decline in crude supplies

Crude-oil prices on Thursday finished with modest gains in an up-and-down session, as market participants grew optimistic about inventory reports that point to a steady decline in U.S. crude stocks.

The U.S. Energy Information Administration reported that domestic-crude supplies fell by 4.6 million barrels for the week ended Dec. 22, compared with a 6-million-barrel drawdown reported by the American Petroleum Institute late Wednesday. Markets had been anticipating a decline in crude oil of about 3.7 million barrels.

EIA also showed that gasoline stockpiles increased by about 590.000 barrels on the week, while distillate products rose by 1.1 million barrels. And crude supplies at a key energy hub at Cushing, Okla., fell by 1.6 million barrels, according to the report.

February West Texas Intermediate oil on the New York Mercantile Exchange CLG8, +0.45%  rose 20 cents, or 0.3%, at $59.84 a barrel. February Brent LCOG8, +0.20%  added 28 cents, or 0.4%, to $66.72 a barrel., marking the second-highest close of 2017.

Market participants didn’t immediately react positively to the inventory reports due to investor reluctance to make aggressive wagers with only one more trading day left in 2017, sources said.

“I think part of the reason that we are not seeing much of a reaction is because it is near the end of the year, but there’s nothing in that report that should make prices break down,” said Phil Flynn, senior market analyst at Price Futures Group.

He said the buildup in gasoline and distillates this week is likely to fade in the future, with a bigger-than-anticipated drop in crude inventories suggesting that demand is picking up going into 2018, a bullish sign for futures.

Both grades of crude oil have approached their highest levels since 2015 amid thin trading over the Christmas holiday and ahead of the new year.

Meanwhile, natural gas NGG18, +6.81%  for February delivery surged 17.60 cents, or 6.4%, to $2.914 per million British thermal units, posting the biggest daily rise since Dec. 21, 2016, when it surged 8.6%, according to FactSet data.

Meteorologists have been forecasting more bitterly cold temperatures in much of the U.S. to close out 2017, which could support further buying in natural gas and heating oil.

Back on the crude front, oil futures were buoyed earlier in the week by supply disruptions in Libya as well as the continuing outage of the Forties Pipeline System in the North Sea, which stopped the flow of 450,000 barrels a day.

The pipeline operator Ineos said Tuesday the Forties should be fully operational early in the new year, and damage to a pipeline in Libya due to an explosion earlier in the week is expected to be repaired as early as next week.

Elsewhere in the energy complex, January heating oil HOF8, +0.62% rose by about 1.2 cents, or 0.6%, to $2.0521 a gallon, marking a fresh 52-week high for heating oil and the highest settlement since Feb. 27, 2015. January gasoline RBF8, +0.00% gained less than 0.1% to $1.7930 a gallon, recording its highest settlement since Nov. 10.

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