Oil Slides On Weak Demand Outlook, Ukraine Fears Subside
NEW YORK, March 5 (Reuters) - Oil prices slid nearly $2 per barrel on Wednesday as U.S. government data reflected weaker oil demand as Europe and the United States head into spring and refiners move into maintenance season.
Prices also dropped as traders sold off the geopolitical risk premium accrued on Monday on fears of escalating tension in Ukraine. Those fears mostly subsided by Wednesday as U.S. Secretary of State John Kerry said the related parties agreed to resolve tensions through dialogue.
Stocks of distillates in the U.S., which include heating oil, rose unexpectedly last week by 1.4 million barrels, data from the U.S. Energy Information Administration (EIA) showed, compared with a forecast of a 1.2-million-barrel draw, indicating slack demand as temperatures are expected to warm.
In the meantime, oil stocks at benchmark delivery point Cushing, Oklahoma, fell for the fifth straight week, the data showed.
U.S. oil's discount to Brent <CL-LCO1=R> narrowed to a five-month low of $5.44 per barrel ahead of the data's release as traders correctly priced in expectations that it would show a decline in oil supplies at Cushing.
The spread later widened to settle at $6.31 as traders sold contracts to cover those bets.
Weaker-than-expected U.S. payrolls data and confirmation by the U.S. Federal Reserve that severe winter weather across much of the United States in the last two months led to slower economic growth also weighed on prices.
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