Crude-oil futures rose for a fourth session Wednesday, settling modestly higher after central banks coordinated moves to shore up the global financial system.
Prices climbed intraday to a two-week high of $101.75 a barrel as the dollar weakened on the move by the U.S. Federal Reserve and other banks to boost liquidity as fears linger about European sovereign debt.
The gains were whittled down by U.S. oil inventory data that showed surprise gains in crude oil and distillate (diesel/heating oil) stocks last week.
Light, sweet crude oil for January delivery on the New York Mercantile Exchange settled 57 cents higher, at $100.36 a barrel. Prices gained 4.4%, or $4.19 a barrel, over the past four sessions. But January ICE North Sea Brent crude settled 30 cents lower, at $110.52 a barrel.
The Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points. In these swaps, the Fed makes dollars available to other central banks, which in turn make the dollars available to banks under their jurisdiction.
"They are putting more liquidity in the system and that means there's a lot of easy money out there. That points to stronger commodity prices," said Gene McGillian, a broker and analyst at Tradition Energy.
He said crude could be poised for a further rally if U.S. economic data continue to show encouraging signs.
"It looks like the rally that took us to near $103.50 is taking shape again," he said, referring to mid-month gains.
Private-sector employment data came in above expectations. Private-sector jobs in the U.S. rose by 206,000 in November, according to a national employment report published by payroll giant Automatic Data Processing Inc. (ADP) and consultancy Macroeconomic Advisers. Economists had expected a rise of 130,000.
But concerns heightened over U.S. oil supply-demand fundamentals after the federal Energy Information Administration reported that crude-oil stocks rose 3.932 million barrels in the week ended Nov. 25 as refiners slowed processing rates and boosted imports. Analysts surveyed by Dow Jones Newswires expected crude stocks to drop 500,000 barrels, while refiners kept operations unchanged on the week.
The data also showed a jump of 5.526 million barrels in distillate stocks (diesel/heating oil), compared with an expected drop of 1.1 million barrels. The rise came on persistent warm temperatures in the Northeast heating oil region. Implied demand for distillates dropped 20.4% from a week earlier, to 3.24 million barrels a day, the lowest level since July 2009. Analysts said the decline shows consumer inventories are plentiful and don't yet need replenishment due to the mild weather.
James Beck, an EIA analyst, noted that the agency cautions against reading too much into a single week of data, especially one including a major holiday. "This data does not a trend make," he said. Four-week distillate demand is up 1.4% from a year earlier and at the highest level in three years for this time of year.
Gasoline stocks rose 213,000 barrels, less than the expected 1.3-million-barrel rise, as shipments of fuel further down the supply chain climbed ahead of the heavy-travel Thanksgiving holiday weekend.
The inventory figures spurred a late selloff in December-delivery heating oil futures, which expired at the settlement.
December heating oil settled up 0.03 cent at $3.0214 a gallon, after posting a rise of more than three cents earlier in the day.
Reformulated gasoline blendstocks futures for December expired at $2.5677 a gallon, up 2.86 cents.
Copyright (c) 2012 Dow Jones & Company, Inc.
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