NEW YORK--Oil futures firmed Thursday on news that oil supplies in a key storage hub fell to a fresh six-year low.
Light, sweet crude for July delivery settled up 86 cents, or 0.8%, at $103.58 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 16 cents, or 0.2%, to $109.97 a barrel.
Oil supplies in Cushing, Okla., fell by 1.5 million barrels, even as nationwide oil stocks rose by 1.7 million barrels, the U.S. Energy Information Administration said Thursday.
The overall gain was larger than the 100,000-barrel build that analysts had expected, according to a Wall Street Journal survey.
However, traders focused on the draw at Cushing, a major onshore storage hub and the physical delivery point for the Nymex contract.
Supplies in Cushing have fallen 16 out of the last 17 weeks and are down more than 20 million barrels since late January, when a new pipeline opened to ship oil out of storage to refineries along the Gulf Coast. Some analysts say supplies in Cushing are nearing the minimum level at which storage tanks are still operational.
"If supply of crude at the delivery point drops, that's more important than an increase in overall crude stocks," said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates.
Supplies in Cushing stood at 21.7 million barrels as of May 23, the lowest level since 2008. Mr. Ritterbusch estimated that Cushing stocks could hit operational minimum levels, or the lowest point at which supplies can easily be pumped out of storage, around 20 million barrels.
Gasoline supplies fell by 1.8 million barrels, contrary to expectations of a 200,000-barrel increase.
Front-month June reformulated gasoline blendstock, or RBOB, settled up 0.77 cent, or 0.3%, at $3.0136 a gallon. The June contract expires Friday. The more actively traded July contract also rose 0.77 cent, or 0.3%, to settle at $2.9958 a gallon.
Gasoline prices are hovering near four-week highs on expectations that demand will continue to rise as travelers hit the road this summer. The busy summer-driving season lasts from Memorial Day to Labor Day.
"I think demand will be stronger than what people are expecting" this summer, said David Ginther, senior vice president of Ivy Investment Management Co., who oversees about $2.4 billion. "You're starting to see employment come back in the U.S., and that helps demand come back for gasoline."
Stocks of distillates, including diesel fuel and heating oil, fell by 200,000 barrels. Analysts had called for a gain of 600,000 barrels.
June diesel fell 1.16 cents, or 0.4%, to $2.9190 a gallon. July diesel fell 1.05 cents, or 0.4%, to $2.9199 a gallon.
Refinery utilization rose by 1.2 percentage points to 89.9% of capacity, above expectations for a gain of 0.4 point.