NEW YORK (MarketWatch) — Oil prices rose Wednesday ahead of government supply data, boosted by an industry report indicating a drop in crude inventories at a key U.S. storage hub as well as ongoing Ukraine tensions.
Crude for May delivery CLK4 +0.80% was last up 98 cents, or 0.9%, to $104.73 a barrel, while Brent crude for June delivery UK:LCOM4 +0.74% gained 80 cents, or 0.7%, to $110.16 a barrel.
In eastern Ukraine on Wednesday, military vehicles flying a Russian flag moved into the city of Slovyansk, a day after the Ukrainian army kicked off an operation to push out pro-Russian separatists in the region.
On the U.S. supply front, the American Petroleum Institute late Tuesday reported a jump of 7.6 million barrels in U.S. crude stocks for the week ended April 11, but also a decline of 0.6 million barrels in stockpiles at Cushing, Okla., the delivery point for futures. A more closely watched weekly supply report is due from the U.S. Energy Information Administration at 10:30 a.m. Eastern.
Commerzbank analysts pointed to the Cushing data to explain the rise in WTI oil prices but cautioned that the overall increase in stocks “is likely to take the wind out of the sails of the price hike.”
Tim Evans, energy futures specialist at Citi Futures and OTC Clearing, also emphasized the continued drop in Cushing inventories. “If confirmed by the more definitive DOE data due out at 10:30 AM ET on Wednesday,” he wrote in a note late Tuesday, “the data would renew the tension between tightness at Cushing that has claimed the greater influence on WTI pricing in our view, and the broader and larger uptrend in US stocks that shows there is a surplus rather than a shortage in crude oil supplies.”
The Commerzbank analysts said Brent crude, the European benchmark, remains “well supported” thanks in part to the escalating conflict in eastern Ukraine.
In U.S. economic news on Wednesday, construction on new homes in March hit the fastest pace in three months, rising 2.8% to a seasonally adjusted annual rate of 946,00, but still missed expectations. Meanwhile, industrial production grew more than forecast.
Traders also will watch for a speech from Federal Reserve Chairwoman Janet Yellen at 12:25 p.m, and the Fed will release its Beige Book survey of current economic conditions at 2 p.m. Read more: Yellen to reintroduce herself to markets
On Tuesday, oil futures closed back under $104 a barrel, weighed down by expectations that Libyan supply is poised to return to the market and concerns over global energy demand following some weak global economic data.
Elsewhere in the energy complex on Wednesday, May gasoline RBK4 +0.22% rose a penny, or 0.3%, to $3.05 a gallon, May heating oil HOK4 +0.73% gained 2 cents, or 0.8%, to $3.01 a gallon and May natural gas NGK14 -0.46% fell 2 cents, or 0.5%, to $4.55 per million British thermal units.
