Oil advanced after government data showed that U.S. gasoline supplies unexpectedly fell, while crude stockpiles rose the most since October.
Gasoline stockpiles fell 869,000 barrels, pushing refining margins higher. Crude inventories climbed 13.8 million barrels in the week ended Feb. 3 as imports increased, the Energy Information Administration said. That was in line with the industry-funded American Petroleum Institute, which reported Tuesday an increase of 14.2 million barrels. Gasoline demand climbed the most in a year.
"There's been a lot of concern about plunging gasoline demand, and with this report it's returned to normal levels," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. "Healthy gasoline demand eventually translates into higher refinery runs and increasing crude demand."
Oil has fluctuated above $50 a barrel since a deal to trim output between the Organization of the Petroleum Exporting Countries and 11 other nations took effect on Jan. 1. While OPEC members implement pledged cuts and Russia says its own reductions are ahead of schedule, U.S. production has edged higher as drillers targeting crude boosted the rig count to the most since October 2015.
West Texas intermediate crude for March delivery rose 15 cents to $52.32 a barrel at 12:29 p.m. on the New York Mercantile Exchange. Total volume traded was about 45% above the 100-day average.
Brent for April settlement rose 13 cents to $55.18 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.29 premium to April WTI.
U.S. crude supplies rose to 508.6 million last week, the highest since May, according to the EIA. Stockpiles at Cushing, Okla., the biggest U.S. storage hub and the delivery point for WTI, climbed 1.14 million barrels.
OPEC Surge
"We were probably seeing the last surge of OPEC output, and now inventories will start to decline — at least they better for the bulls' sake," Kyle Cooper, director of research with IAF Advisors in Houston, said by phone.
Crude imports surged to 9.37 million barrels a day, the highest since September 2012. Domestic production rose to 8.98 million barrels a day, the highest since April.
"We're still seeing the impact of elevated production from OPEC ahead of the cuts," Craig Bethune, a fund manager at Manulife Asset Management Ltd. in Toronto who focuses on energy and natural-resources investments, said by phone. "We should start to see imports decline in the next few weeks."
U.S. gasoline demand increased 7.6% to 8.94 million barrels a day, the highest level this year. Consumption slipped to 8.04 million barrels a day in the week ended Jan. 20, the lowest since 2014.
Gasoline futures for March delivery climbed 2.3% to $1.5215 a gallon. The March gasoline crack spread, a rough measure of the profit from refining crude into the fuel, rose as much as 20% to $12.403 a barrel.
