Oil futures climbed on Wednesday, with the U.S. benchmark logging the first gain in three sessions after the Obama administration loosened a ban on crude exports.
Prices saw some pressure during the session after government data early Wednesday showed U.S. durable goods fell by 1% in May and the economy shrank more than previously expected in the first quarter, while U.S. crude inventories rose last week.
Crude oil for August delivery climbed 47 cents, or 0.4%, to settle at $106.50 a barrel on the New York Mercantile Exchange after tapping a high of $107.50 in electronic trading overnight. Just ahead of the government supply data, the contract was at $105.85.
U.S. benchmark crude drew some support from a Wall Street Journal article “touting U.S. oil condensate exports,” said Tim Evans, an energy analyst at Citi Futures. “There may be much less to this story than meets the eye, however, as it appears this was more of an official confirmation that minimally processed condensates are classified as a product under export rules rather than falling under the crude-oil export ban.”
“Having released a trade flow, however, it’s hard to put the condensate story genie back in the bottle,” he said in a note.
The Wall Street Journal late Tuesday reported that federal officials told two energy companies they can export legally a kind of ultralight oil that has become plentiful as drillers tap shale formations across the U.S. Under current rules, companies can export refined fuel but not oil itself.
The new approach, which hasn’t been publicly announced, rebrands some types of ultralight oil as fuel after it has been minimally processed. Read: producers win, refiners lose as U.S. crude-oil export ban dies.
Any upside for Nymex crude was capped, however, on the back of weekly petroleum-supply data.
Early Wednesday, the U.S. Energy Information Administration said crude stockpiles rose 1.7 million barrels for the week ended June 20. The American Petroleum Institute had said late Tuesday that crude supplies rose 4 million barrels. Analysts surveyed by Platts had forecast a decline of 2 million barrels for crude.
Crude stocks at Cushing, Oka., the delivery hub for Nymex futures, climbed by 400,000 barrels to 21.8 million barrels — that was the second increase in 11 weeks, though stocks at the hub were at a 45.2% deficit to the five-year average, according to Platts.
Gasoline supplies climbed by 700,000 barrels, while distillate stockpiles rose 1.2 million barrels, according to the EIA. Gasoline stockpiles were expected to climb by 2 million barrels, while distillates, which include heating oil, were seen up 1 million barrels, according to the Platts poll.
July gasoline fell 3 cents, or 1.1%, to $3.09 a gallon, while July heating oil fell 1 cents, or 0.4%, to $3.03 a gallon.
Meanwhile, Brent futures slipped on Iraqi oil exports, which showed no ill effects from the violence sweeping parts of the country as Sunni insurgents clash with government forces.
ICE August Brent crude fell 46 cents, or 0.4%, to $114 a barrel.
Key oil fields and facilities in the south of the country are expected to remain insulated from the fighting, though Brent, which hit a nine-month high above $115 a barrel last week, doesn’t look set to shed its risk premium as long as the violence continues, analysts said.
“Brent crude prices have eased off slightly, although this is unlikely to last with U.S. intervention looking increasingly likely,” said Craig Erlam, market analyst at Alpari in London.
In the energy-product markets, July natural-gas futures rose almost 2 cents, or 0.4%, to end at $4.55 per million British thermal units after gaining 2% in the previous session.
The EIA will issue its weekly natural-gas supply report on Thursday, with consensus expectations calling for an increase of 101 billion cubic feet to 103 billion cubic feet, according to Citi Futures’ Evans. That would be bearish compared with the 82 billion-cubic-foot five-year average gain, he said.