US Crude Oil Rises on Positive Economic Data
Oil prices rose on Thursday, buoyed by strong economic data from China, the eurozone and the United States, with U.S. crude prices getting an extra boost from expectations the vital Seaway pipeline could resume full capacity operation within a week.
Enterprise Product Partners, the operator of the Seaway pipeline, said on Thursday it had no timeline for restoring full flows. The company said throughput was reduced because of high inventories in Jones Creek, Texas, resulting from factors outside of its control at nearby refineries and pipelines.
Trading sources said they believed the pipeline, which connects the Cushing, Oklahoma delivery point for the U.S. oil futures contract to the Gulf Coast refining center, would be back up and running within a week.
U.S. crude oil prices plunged on Wednesday with news of the restricted flow, on expectations the reduced rates would cause a build of crude stockpiles at Cushing. Inventories there hit record levels earlier this month due to rising crude flows from North Dakota and Canada. Seaway pointed to external factors at nearby refineries and pipelines as causes for the slowdown.
Brent crude futures last rose 0.4 percent to $113 a barrel, hitting over a three-month high, but gains were capped by rising global oil supplies.
U.S. light, sweet crude last rose 0.8 percent to around $96 per barrel, rebounding from a 1.5 percent fall on Wednesday on rising deliveries through the Seaway pipeline linking Cushing to the U.S. Gulf coast.
As U.S. crude's gains outpaced the rise in Brent, the international benchmark's premium to U.S. futures narrowed to $17.15, from 17.57 on Wednesday.
The oil complex was also supported by encouraging purchasing managers' index data out of China and the eurozone, as well as a low weekly jobless claims report in the United States and strong American manufacturing numbers.
"I think the market is readjusting on the crude oil to yesterday's sell-off, because now, at least based on conversations around the market, it doesn't look like the Seaway pipeline will run on the reduced rate for an extended time," said Dominick Chirichella, Senior Partner at Energy Management Institute in New York.
Oil markets have been closely watching economic data from major consuming nations for signs of an increase in struggling fuel demand. U.S. jobless claims fell to their lowest level since January 2008, and manufacturing had its strongest showing since March 2011.
In addition, gasoline futures found support from Energy Information Administration data showing gasoline stocks fell sharply, off 1.74 million barrels for the week to Jan. 18, despite an expected rise, pushing gas prices up.
Crude and distillates inventories rose during week, the EIA data showed.