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Oil futures traded higher Wednesday as investors shook off an industry report showing a rise in U.S. crude and product inventories ahead of official data and monitored the threat of a strike by Norwegian offshore workers.
Price action
-
West Texas Intermediate crude for July delivery
CL00,
+1.22% CLN22,
+1.22%
rose $1.25, or 1%, to $120.66 a barrel on the New York Mercantile Exchange after closing at a nearly three-month high on Tuesday. -
August Brent crude
BRN00,
+1.19% BRNQ22,
+1.19%
was up $1.22, or 1%, at $121.78 a barrel on ICE Futures Europe. -
Back on Nymex, July gasoline
RBN22,
+0.07%
was little changed at $4.158 a gallon, while July heating oil
HON22,
-0.22%
ticked up 0.2% at $4.329 a gallon. -
July natural gas
NGN22,
+0.83%
was up 0.3% at $9.319 per million British thermal units.
Market drivers
Oil futures were holding gains despite industry data pointing to a rise in U.S. crude and product inventories.
The American Petroleum Institute late Tuesday reported that U.S. crude-oil inventories rose 1.85 million barrels last week, according to a source citing the data. Gasoline inventories were up 1.82 million barrels, while distillate stocks rose 3.38 million barrels.
The Energy Information Administration will release official inventory figures on Wednesday morning. Analysts surveyed by S&P Global Commodity Insights forecast crude inventories to fall by 2.9 million barrels, while gasoline stocks were seen up 2 million barrels and distillate stocks up 800,000 barrels.
The crack spread — the difference between the price of a barrel of oil and the products that can be refined from it — narrowed on Tuesday, possibly reflecting the API data, noted Carsten Fritsch, commodity analyst at Commerzbank, but remains near record levels.
He noted that the so-called 3-2-1 crack spread, which indicates how much revenue is generated for U.S. refineries converting 3 barrels of WTI into 2 barrels of gasoline and 1 barrel of diesel, was at $56.50 a barrel after hitting a record $62.50 at the beginning of this week.
Oil was also finding support from the potential for a strike by Norwegian offshore oil workers next week, Fritsch said, noting that Norway is the most important European oil and gas producer outside Russia.
A strike by 845 of Norway’s 7,500 offshore oil and gas workers beginning Sunday would have a limited effect on oil output, while natural-gas output would be unaffected in sensitivity to the situation in Europe as a result of the Russia-Ukraine war, labor unions said, according to Reuters.
