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Crude-Oil Futures Rally Stalls Below $96 a Barrel

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NEW YORK--Crude-oil futures prices ended slightly weaker Friday amid mixed economic signals and concerns about refinery maintenance curbing near-term U.S. oil demand.

Traders said disappointing data on U.S. new home sales in December negated the impact of day-earlier figures showing a five-year low in weekly jobless claims. The Commerce Department said home sales dropped by 7.3% from November, to 369,000 homes. That fell short of forecasts for sales of 385,000 homes in the month.

With the shine off the economic picture, the focus shifted to bearish U.S. oil data, which showed refiner demand for crude oil last week was cut dramatically--to a 20-month low--by operating snags and seasonal maintenance. The drop in crude runs of 895,000 barrels a day was the most since September 2008, when Hurricane Ike ravaged Gulf Coast refineries. Crude stocks rose by more than expected in the week, to 363 million barrels, the highest for the week on 30 years of EIA data.

The housing data "took the wind out of the rally," said Gene McGillian, broker and analyst at Tradition Energy, adding that the EIA data also "isn't supportive for a breakout to the upside."

Demand for distillate fuel (diesel/heating oil) in the latest four weeks was the lowest since July 2009, lagging the year-earlier level by 8.2%, the EIA said.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled 7 cents lower, at $95.88 a barrel, after trading in a range of $95.43 to $96.56 a barrel. After the February contract expired Monday at a four-month high of $96.24 a barrel, front-month crude has failed to settle above $96 a barrel. March crude dropped 16 cents from a week earlier. ICE North Sea Brent crude oil ended unchanged at $113.28 a barrel and carried a premium to Nymex crude of $17.40 a barrel, after topping $20 a month ago.

The market is still puzzling out issues surrounding movement of crude oil on the Seaway pipeline, which moves crude out of storage at Cushing, Okla. to refineries in the key Gulf Coast region. Capacity on the line nearly tripled to 400,000 barrels a day this month and has recently helped lift Nymex prices on the notion that U.S. crude would fetch higher prices in the Gulf, where it would compete with costlier imports.

But the pipeline operator has said flows along the full length of the line have been impacted by maintenance work at a large Texas refinery, and hasn't given precise figure how much oil is now running through the line. Crude oil stocks recently built up to record high levels at Cushing and may take longer to drain, depending on the state of Seaway operations, analysts said.

February-delivery reformulated gasoline settled 1.25 cents higher at $2.8754 a gallon, the highest level since Oct. 12. February heating oil settled lower by 2.96 cents, or 1%, at $3.0568 a gallon, recording the biggest single-day drop since Jan. 15, after prices ended Thursday at their highest level since Oct. 30.

Copyright (c) 2012 Dow Jones & Company, Inc.

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