Oil Futures Waver After Inventory Report

By Dow Jones Business News, 
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--Crude-oil supplies rise less than expected

--Cushing stockpiles fall to lowest level this year

--Nymex March futures down 5 cents at $97.14 a barrel

By Nicole Friedman

NEW YORK--Crude-oil futures wobbled Wednesday after government data showed an increase in crude-oil supplies but a shrinking storage glut in Cushing, Okla., where the benchmark futures contract is priced.

Light, sweet crude for March delivery recently traded down 5 cents at $97.14 a barrel on the New York Mercantile Exchange, down from nearly $98 in earlier trading. Brent crude on ICE Futures Europe slid 7 cents, or 0.1%, to $105.71 a barrel.

U.S. crude oil supplies rose by 400,000 barrels in the week ended Jan. 31, according to the U.S. Energy Information Administration. Analysts had expected the EIA to report that crude-oil supplies rose by 2.2 million barrels, according to a Wall Street Journal survey.

However, the smaller-than-expected rise could be attributed to a large drop in imports owing to inclement weather, said Kyle Cooper, managing director of research for IAF Advisors in Houston.

Imports of commercial crude oil fell by 1.2 million barrels to 6.887 million barrels, their lowest level since the week ended Dec. 6.

"There were some Houston ship channel problems, so those imports will probably...rebound," Mr. Cooper said. "Crude stocks will get the build we anticipated this week next week."

Stockpiles in Cushing fell by 1.5 million barrels to 40.3 million barrels, the lowest level since the week ended Dec. 27.

The report was the first to include an entire week in which the southern leg of TransCanada Corp.'s (TRP.T, TRP) Keystone XL pipeline was in operation. The pipeline started commercial service to transport crude oil from Cushing to the Gulf Coast on Jan. 22.

U.S. oil production has boomed in recent years, as hydraulic fracturing and horizontal drilling techniques have enabled energy producers to tap into supplies trapped in shale-oil fields. However, without sufficient transportation capacity connecting the new sources of oil to existing refineries, much of that supply has been stuck in storage in Cushing. The storage glut in Oklahoma has kept U.S. oil prices below the price of Brent oil, the international benchmark, in recent years.

The new pipeline leg is projected to transport 520,000 barrels a day on average this year.

Stocks of distillates, including heating oil and diesel fuel, fell by 2.4 million barrels, the EIA said. Analysts had expected a 2-million-barrel drop. Frigid temperatures have boosted heating-oil usage, especially in the Northeast, home to the majority of U.S. households that use heating oil.

Front-month March diesel recently traded up 0.45 cent, or 0.2%, to $2.9874 a gallon.

Gasoline supplies rose by 500,000 barrels, compared with expectations for a 1.1-million-barrel increase.

March reformulated gasoline blendstock, or RBOB, recently rose 1.1 cents, or 0.4%, to $2.6141 a gallon.

Refining capacity utilization fell 2.1 percentage points to 86.1% of capacity, the lowest level since the week ended Oct. 18. Analysts had expected the operating rate to drop by 0.5 point in the week.

Write to Nicole Friedman at nicole.friedman@wsj.com


  (END) Dow Jones Newswires
  02-05-141141ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


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