Settling to just above $79 a barrel on the New York Mercantile Exchange Thursday, crude oil futures rallied on today's inventory data spotlighting a larger-than-expected draw in distillates. Additionally, moves in the broader financial market and tensions in both France and Iran helped oil bulls lift the price per barrel of crude oil back near an $80-threshold.
Despite the dollar's gains earlier in the session, the price of light, sweet crude oil for March delivery broke through its technical resistance near $78 to close at $79.06 on the NYMEX. Also propping up the oil complex, gasoline futures continued to climb above $2 a gallon in spite of last week's build in petroleum products. Natural Gas spot prices at the Henry Hub, however, inched down to $5.17/Mcf.
"We really had a lot of factors driving up the price of oil," noted Phil Flynn, senior analyst at PFG Best in Chicago. "Geopolitics and technicals are really what come into play today that gave oil the final push."
Bullish Elements Push Crude Higher
Delayed by Monday's holiday, an inventory report released by the Energy Information Administration today contained a huge draw in domestic distillates nearly double the amount analysts had forecast.
The bigger draw by 2.9 million barrels against an anticipated 1.5 million barrels proved bullish for oil markets, which shrugged off increased crude oil and gasoline inventories by 3.1 million barrels and 1.7 million barrels, respectively.
Heating oil, in particular, fell by 1.4 million barrels due to an uptick in fuel demand on the heels of last week's cold front.
Although the EIA report helped spur oil prices higher, traders also accelerated purchasing of the energy commodity on news of an extended strike action at six of Total S.A.'s oil refineries. With plans to halt output at five more refineries, Total's workers continued their protest of a potential shutdown of one of the French oil major's plants.
Flynn also points to the International Atomic Energy Agency's concerns that Iran may be building a nuclear warhead as a bullish element for near term oil prices.
"The International Atomic Energy Agency's acknowledgment has raised the stakes on the Iranian situation, which means the chance of international sanctions will go up dramatically," the analyst said.
Most Popular Articles
From the Career Center
Jobs that may interest you