Crude Edges Higher Despite Bearish Inventory Report

Crude futures ended slightly higher Wednesday after historically tight supplies of heating oil, diesel and similar petroleum products overshadowed an increase in crude oil inventories.

Nymex front-month oil futures for November delivery settled at $92.12 per barrel, up three cents, or less than 0.1%. Brent crude futures settled 78 cents lower at $113.22.

Crude had traded in negative territory for much of the session, hitting an intraday low of $91.55 soon after the Department of Energy released its weekly petroleum inventory report. The inventory report was broadly bearish and counteracted good news in other markets about the euro and the U.S. housing market.

But distillates fell by 2.218 million barrels, higher than the 1 million barrel decline that was forecast. The level of distillate stocks nationally is at the lowest level for this time of year in 12 years. The level of distillate stocks in the Northeast is currently lower than at any point since the Energy Information Administration began reporting the data in 1990.

Phil Flynn, an analyst with the Price Futures Group in Chicago, said the market's reaction would have been stronger to the distillate figure if it were closer to heating season. But he noted that heating oil futures traded far better than gasoline futures on Wednesday.

"The supplies of diesel are tight," Mr. Flynn said. "That is giving the markets a little bit of a boost."

Earlier, the oil market had bid crude into negative territory after the inventory report pointed to a build of 2.86 million barrels, more than twice the 1.3 million expected by analysts. Stocks of gasoline also came in as more plentiful than expectations.

The report "reaffirms that overall the petroleum markets are pretty well supplied," said Kyle Cooper, managing partner at IAF Advisors in Houston.

Prior to the report's release, crude futures had traded in positive territory after Moody's Investor Service upheld Spain's credit rating, strengthening the euro relative to the dollar.

Also boosting oil had been surprisingly good U.S. housing data. Housing starts surged 15% higher last month from August, to a seasonally adjusted annual rate of 872,000, the Commerce Department said Wednesday. That was well above the expectations of a seasonally adjusted annual rate of 768,000. Compared with a year earlier, new construction was up 34.8%.

Wednesday's three-cent gain for crude marked the fourth day in a row that crude prices have ended the day barely changed from the prior day's result. Crude futures has settled within a 27-cent range for the last four sessions.

Front-month reformulated gasoline blendstock, or RBOB, settled at $2.782 a gallon, down 6.4 cents. Heating oil futures settled at $3.189 a gallon, down 0.9 cent.