Brent crude oil jumped $2 to end at its highest in more than a month on Thursday, fuelled by a sharp run-up in gasoline and gas oil prices on news of dwindling stocks and refinery glitches in the United States and Europe.
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Upbeat U.S. economic data helped support prices, while traders also kept an eye on talks between Western powers and Iran on hopes of an accord over its nuclear program. New York gasoline jumped 3 percent, leading the complex on news of fresh refinery outages on the U.S. Gulf Coast.
Gains accelerated through the day as traders who had sold oil short during the recent slump to multi-month lows rushed to buy contracts and cover those bets.
"The reality is when shorts are running the market as they have been, the longer the market sits there the more chance it has of going the other way," said Rich Ilczyszyn, chief market strategist at iitrader.com in Chicago.
Brent crude rose $2.02 to settle at $110.08. The contract breached the 100-day moving average of $109.36 for the first time in three weeks. Brent had touched a 4-month low of $102.98 per barrel on Nov. 8.
U.S. oil settled $1.59 per barrel higher at $95.44, after reaching a high of $95.63. The contract had touched a five-month low of $92.43 on Tuesday.
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Brent oil's more dramatic rise boosted its premium over U.S. crude oil <CL-LCO1=R> by 65 cents $14.86.
Gasoline prices jumped on the unexpected closure of a gasoline-making unit at Motiva's 600,000 barrel per day refinery in Port Arthur, Texas, the nation's largest. The 88,000 bpd fluid catalytic cracker was shut late Wednesday morning, according to Genscape. A Motiva spokesman said it initiated maintenance activities on Nov. 19 on unspecified units.
U.S. gasoline futures for December delivery ended more than 8 cents higher at $2.7438 a gallon, after hitting a high of $2.7460. The contract ended with its largest one-day percentage gain since Oct. 10.
In Europe, the gasoline-making unit at Total's 360,000-bpd refinery in Antwerp, Belgium, was offline after an explosion on Tuesday that killed two.
"This is a refinery capacity situation that is further challenged as we come into a very strong demand period," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.
Gasoline stocks at Europe's Amsterdam-Rotterdam-Antwerp hub dropped 28.2 percent from last week to the lowest level this year, while gas oil stocks were at their lowest since 2008.
U.S. data showed distillate stocks fell by more than 4 million barrels than expected last week as U.S. refineries export fuel to Europe.
Low distillate stockpiles on both sides of the Atlantic helped flip the December/January gas oil spread <LGOZ3-F4> into a slight backwardation as indications of tight supplies means greater refining demand.
Positive U.S. economic data also supported prices. The number of Americans filing new claims for unemployment benefits fell more than expected last week, while the U.S. Manufacturing Purchasing Managers Index rose to the highest level since March, suggesting a strengthening economy.
In Geneva, France and Iran traded tough words on Thursday as major powers struggled to finalise an interim deal to curb Tehran's nuclear program in exchange for sanctions relief, with Paris urging the West to remain firm and Tehran deploring a loss of trust.
Sanctions against Iran have kept 1 million barrels of oil per day from the market, and any indication that an agreement would be reached could mean lower prices as Iranian oil supplies would become available.
(By Jeanine Prezioso; Additional reporting by Joshua Franklin and Julia Payne in London and Manash Goswami in Singapore; Editing by Dale Hudson, David Evans, Marguerita Choy, Nick Zieminski and Meredith Mazzilli)