UPDATE 8-Oil rises on encouraging economic data, Seaway optimism

Fri Jan 25, 2013 2:16am IST

Related Topics

Stocks

   

* U.S. jobless claims drop to five-year low

* U.S. gasoline inventories fall unexpectedly -EIA

* Strong economic news from major consumer countries

* Coming up: CFTC positions data 3:30 p.m. EST Friday

By Gabriel Debenedetti

NEW YORK, Jan 24 (Reuters) - Oil prices rose in heavy trade 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 that the vital Seaway pipeline could resume full capacity operation within a week.

Enterprise Products 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 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 for March delivery rose 48 cents to settle at $113.28 a barrel, having reached a three-month high of $113.65, but gains were capped by rising global oil supplies.

U.S. crude rose 76 cents to settle at $95.95, 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 $17.33, based on settlements, from $17.57 on Wednesday.

Trading volumes were high, with U.S. crude volumes on the New York Mercantile Exchange 30 percent over the 30-day moving average. Brent volumes were 25 percent above that average.

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 prices up. U.S. RBOB gasoline futures rose nearly 1 percent, marking the sixth straight day of gains, the longest positive stretch since December 2011.

Crude and distillates inventories rose during week, the EIA data showed.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Jan Dhan Yojana

REUTERS SHOWCASE

Japan Trip

Japan Trip

Modi eyes breakthrough nuclear pact on Japan trip.  Full Article 

Chance For Reform

Chance For Reform

India's coal crunch - a chance to revamp, reallocate and revive.  Full Article 

E-Commerce

E-Commerce

Ratan Tata invests in online retailer Snapdeal.  Full Article 

Top Priority

Top Priority

Finance minister says food inflation is top priority.  Full Article 

Deal Talk

Deal Talk

Who wants to buy Snapchat? Microsoft, Google, Apple, Alibaba.  Video 

Fresh Funding

Fresh Funding

Tiger Global leads $65 million funding in Indian messaging app Hike.  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

Safety Net

Safety Net

SEBI revamps trading safety-net rules.  Full Article 

Fraud Investigation

Fraud Investigation

IMF's Lagarde put under investigation in French fraud case.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage