Brent slips on refinery woes, petrol gains

December 27, 2013 - 8:58:45 am

NEW YORK: Brent oil fell yesterday as French workers extended a strike at two refineries, which limited demand, while US oil prices rose in choppy trade, underpinned by positive US jobs data.

US petrol and ultra low-sulfur diesel (ULSD) futures prices at months-long highs also supported US crude oil prices.

Supply disruptions in Africa limited losses in Brent while an unexpected rise in US crude stockpiles capped gains in US benchmark West Texas Intermediate.

“A lot of oil is being produced and put into storage and I think that will limit gains,” said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.

Brent crude was down 15 cents at $111.75 a barrel at 10:43am EST (1543 GMT) after touching an intra-day high of $112.12, the highest since December 5. 

US crude was up 9 cents at $99.31. Both markets were shut for Christmas on Wednesday.

Spread steadies

The spread between the two benchmarks has steadied around $12.50 per barrel for the last four sessions in thin holiday trade. It was last trading at $12.47 per barrel.

US petrol futures continued to rise, hitting $2.8382 per gallon, their highest peak since September 9, before easing to trade at $2.8315. ULSD futures traded to their highest level since September 16 at $3.0899 per gallon. The contract last traded at $3.0845.

While US crude stocks unexpectedly rose by 716,000 barrels last week, refineries boosted output and distillate and gasoline stockpiles fell, indicating demand for oil products, a report from industry group the American Petroleum Institute said late on Tuesday. 

Eyes on EIA report

Traders will next look to the US government’s Energy Information Administration report to gauge supply and demand. The data is due on December 27 at 11am EST, 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. The government in South Sudan, which is threatened by civil war, has shut 45,000 b/d of production, and export terminals remain closed in Libya, where output is around a tenth of the 1m b/d 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.

Reuters

comments powered by Disqus