Futures Movers: Oil slips as inventory report shows decline in crude but gain in gasoline

Crude-oil prices on Thursday were retreating slightly from two-year highs as data on crude stockpiles showed a decline in crude oil but a modest raise in gasoline inventories.

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 stocks 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, +0.00%  gave up 13 cents, or 0.2%, at $59.55 a barrel after gaining modestly earlier. February Brent LCOG8, -0.06%  declined 12 cents, or less than 0.2%, to $66.86 a barrel.

Market participants said that the lack of immediate upbeat reaction to the decline in crude is due to investor reluctance to make any aggressive bets with only one more trading day left in 2018.

“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 in distillates for 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, +7.28%  for February delivery surged 20 cents, or 7.7%, to $2.941 per million British thermal units, on track to post the biggest daily rise since December of 2016, when it surged 8.6%

Meteorologists were forecasting bitter 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, -0.04% rose by about 1 cent, or 0.5%, to $2.051 a gallon. Its close at $2.04 Wednesday marked a 52-week high for heating oil and the highest settlement since Feb. 27, 2015, according to WSJ Market Data Group. January gasoline RBF8, -0.10% fell by about 1 cent, or 0.3%, at $1.785 a gallon.

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