By Victor Reklaitis and Michael Kitchen, MarketWatch
NEW YORK (MarketWatch) — Oil futures moved higher on Wednesday, supported by a drop in weekly U.S. crude inventories, though the moves were modest ahead of the Federal Reserve policy decision due out later in the day.
Benchmark U.S. crude oil for January CLF4 +0.34% rose 31 cents, or 0.3%, to $97.78 a barrel, paring a 26-cent loss Tuesday on the New York Mercantile Exchange.
The advance for Nymex crude followed American Petroleum Institute data released after the close of regular trade showing U.S. oil stocks fell by 2.5 million barrels in the week ended Dec. 13, according to sources.
While a Platts survey of analysts had tipped a 4-million-barrel drop, Citi Futures energy strategist Timothy Evans said the result was roughly in line with consensus, “although there remains some risk that the more definitive [Energy Information Administration] data due out at 10:30 a.m. Eastern Standard Time on Wednesday will tell a different story.“
Following the EIA data, the markets were due to receive the last Federal Reserve policy decision of the year.
Most market participants expect the Fed will hold off from announcing its long-awaited tapering of monetary stimulus, though the language of the policy statement will get close scrutiny and will likely move markets across many asset classes.
Meanwhile, Brent crude for February delivery UK:LCOG4 -0.02% was basically flat on Wednesday at $108.44 a barrel following its 97-cent loss on Tuesday.
“The larger issue is that Europe remains relatively well supplied with crude oil, with North Sea output running at the highest level in months, and the recent drop in U.S. crude imports leaving more barrels available for the rest of the global market,” Citi’s Evans wrote about Brent’s move on Tuesday.
“The decline in OPEC [Organization of the Petroleum Exporting Countries] crude-oil production over the past few months may help limit the surplus, but it still looks as though supply will outpace demand in the months ahead,” he said.
In other energy-futures trade Wednesday, January gasoline RBF4 +0.66% held steady at $2.65 a gallon, and January heating oil HOF4 +0.28% inched up about a cent to $2.97 a gallon.
January natural gas NGF14 +0.68% improved by 3 cents, or 0.7%, to $4.32 per million British thermal units, adding to its 1-cent rise the previous day.
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Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles. You can follow him on Twitter at @KitchenNews.
