Crude-oil futures finished slightly higher Wednesday after a government report showed U.S. crude-oil stockpiles rose less than expected last week, although oil demand overall was weak.
Light, sweet crude oil for March delivery settled up 30 cents, or 0.3%, to $98.71 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE futures exchange settled 97 cents per barrel, or 0.8%, higher at $117.20.
U.S. oil inventories last week rose 300,000 barrels, the Department of Energy reported, well below the 2.7-million-barrel increase forecast by analysts surveyed by Dow Jones Newswires.
Despite the modest increase, weak demand continues to keep prices restrained. Nymex futures actually declined from highs of $100.09 a barrel following the weekly survey from the DOE's Energy Information Administration, though they still ended the session in positive territory.
The EIA's indirect measure of oil demand fell 0.5% last week, to its lowest level in 13 years. Gasoline inventories rose 1.6 million barrels, while stockpiles of distillates, including heating oil and diesel, rose 1.2 million barrels.
"The gasoline demand number is just bad. The total U.S. petroleum demand number is just horrific," said Kyle Cooper, managing partner at IAF Advisors in Houston.
Analysts polled by Dow Jones Newswires expected gasoline stocks to rise 100,000 barrels, while stocks of distillates were seen falling 900,000 barrels.
Wednesday saw the continuation of a recent trading pattern, with Brent crude, the European benchmark, rocketing above U.S.-traded West Texas Intermediate. WTI, which is physically settled in Cushing, Okla., has been pressured by concerns about weak U.S. demand and another supply glut in the Midwest oil hub.
The EIA said Wednesday that oil inventories in Cushing rose another 400,000 barrels last week, following a 1.5-million-barrel jump the week before. Meanwhile, demand for space on pipelines running into Cushing continues to rise, suggesting that inventories there could rise further.
High inventories in Cushing were a major factor sending the gap, or spread, between Brent and WTI widening to nearly $28 a barrel last fall. The spread collapsed to below $8 a barrel in the subsequent months, after news that a major pipeline shipping crude from the Gulf Coast to Cushing would be reversed.
The reversal of the Seaway pipeline doesn't take effect until June 1, however. In the meantime, Brent crude itself has been lifted by a forthcoming oil embargo by the European Union on Iran, which has sent EU traders scrambling for alternate supplies.
"The market had been worried for a long time," said Mike Wittner, oil analyst at Societe Generale. "You have bullish tail risks with Iran."
On Wednesday, the spread between the two contracts stood at more than $18 a barrel. Historically, the two similar-quality crudes have traded just $1 or so apart.
Front-month March reformulated gasoline blendstock, or RBOB, settled up 4.77 cents, or 1.6%, to $2.9752 a gallon. March heating oil settled down 0.14 cent to $3.1895 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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