Crude Oil boosted by products demand

Crude oil futures ended higher on Thursday, boosted by demand for refined products after industry data earlier this week showed a steep decline in gasoline and distillate inventories. 
US gasoline and ultra low-sulfur diesel (ULSD), more commonly known as heating oil, futures both rose to more than three-month highs in intraday trading as large French refineries remained offline due to strikes.

While US crude stocks unexpectedly rose last week, refineries boosted output and distillate and gasoline stockpiles fell, a report from industry group the American Petroleum Institute said late on Tuesday, indicating strong demand for oil products, including exports, Reuters reported.



"Seasonally, this is the time of year when gasoline and heating oil are in the middle of their rally," said Bill Baruch, senior market strategist at iitrader.com in Chicago.  Supply disruptions in Africa supported Brent while the rise in US crude stockpiles capped gains in US benchmark West Texas Intermediate.
Brent crude settled 8 cents higher at $111.98 a barrel, after touching an intraday high of $112.12, the highest since 5 December.

US crude ended 33 cents higher at $99.55 per barrel, trading fully above the 200-day moving average of $98.92 for the whole session for the first time in two months. A settlement above $99.50 likely means prices have further to rise, some technical analysts said. Both markets were shut for Christmas on Wednesday.
Other analysts expect the price to ease longer term as refiners enter maintenance at the end of next month, reducing demand for crude as production rises.

"With rising North Dakota and Texas oil production, I think that WTI is a little on the high side," said Kyle Cooper, director of research with IAF Advisors in Houston.
The spread between the two benchmarks has steadied around $12.50 per barrel for the last four sessions in thin holiday trade. It settled at $12.43, narrowing by 25 cents from the previous session.
US gasoline futures touched $2.8463 per gallon, their highest level since 9 September, before easing to settle less than one cent higher at $2.82. ULSD futures traded to their highest level since 16 September at $3.1085 per gallon, settling 1.65 cents up at $3.0948.

Rich refining margins are prompting US refiners to make oil products. The crack, or difference, between US crude oil futures and gasoline continued to widen on Thursday, hitting a four-week high of $19.72 per barrel. The price ultimately narrowed by 26 cents from the previous session to settle at $18.68.
Traders will next look to the US government's Energy Information Administration report to gauge supply and demand. The data is due on 27 December at 11:00 am in New York, delayed from its usual Wednesday release by the Christmas holiday.

US crude also drew support from jobs data showing the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly a month, a hopeful sign for the labour market in the world's top oil consumer.  In Europe, workers extended a strike over pay at two French refineries, while lifting action at a third plant. A majority of workers at the 247,000 barrel-per-day Gonfreville refinery, Total's largest in France, and at the 153,000-bpd La Mede refinery voted to extend their action, union officials said.

The strikes, in addition to poor refinery margins, have weighed on European crude demand, say analysts.
Supply outages in Africa are also in focus and added some geopolitical risk premium to prices. The government in South Sudan, which is threatened by civil war, has shut 45,000 bpd of production. Rebels in the nation have seized some oil wells and may damage them.


Export terminals remain closed in Libya, where output is one-quarter of the 1 million bpd it pumped in July. Tribal leaders will hold more talks on reopening ports in eastern Libya but the government will not negotiate with protesters blocking them, the prime minister said.