Refinery Maintenance Weighs on U.S. Crude Demand


Brent crude oil ended nearly a dollar higher on Thursday, supported by a stronger euro, French port closures and tighter supplies from the North Sea.

The euro reached a one-week high against the U.S. dollar on the back of the European Central Bank's announcement that it would leave its main interest rate unchanged.

Continue Reading Below

A 24-hour strike in France blocked the oil hub of Fos-Lavera and cut into supply there.

The four North Sea benchmark crudes that underpin the Brent oil futures contract are set to load fewer barrels in March, tightening supply.

U.S. crude oil futures rose but only after giving back nearly half of their gains on news that U.S. refiners were moving into their maintenance season.

Citgo Petroleum Corp began a shutdown at its refinery in Corpus Christi, Texas, for maintenance planned to last about 35 days.

U.S. crude fell nearly 60 cents on the news.

"We're in peak (refinery) turnaround season now, which translates into weak demand," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.

U.S. crude settled 46 cents higher at $97.84 a barrel, widening its discount to Brent <CL-LCO1=R> by 48 cents to $9.35 a barrel. On Wednesday, the spread narrowed to $7.94 per barrel, the tightest it has been since Oct. 10.

U.S. crude was supported by strong U.S. economic data released Thursday morning and rising U.S. gasoline futures.

The number of Americans filing new claims for unemployment benefits fell slightly more than expected last week, according to the U.S. Labor Department.

U.S. gasoline prices rose more than 1 percent on the back of rising Renewable Identification Number prices and a seasonal selloff in heating oil as traders move to gasoline futures ahead of the summer driving season.

U.S. crude also drew support from snow and ice storms in the U.S. Northeast, which boosted demand for heating fuels.

In spite of cold weather demand, U.S. ultra-low sulfur diesel (ULSD) traded half a cent higher to end the day at $2.9951 per gallon.

U.S. gasoline futures rose by more than 4 cents to settle at $2.6830 per gallon as traders bought contracts to cover short positions.

"There are a couple seasonal long trades in gasoline - the first in December and the second in January," said Bill Baruch, senior market strategist at futures trading website in Chicago. "There are now shorts in the market as all the energies rise, and now they're buying to close their position."

Traders on Friday will be awaiting the release of U.S. non-farm payrolls data, considered by many the No. 1 gauge of the labor market and the American economy, at 8:30 a.m. EST (1330 GMT).

(By Elizabeth Dilts; Additional reporting by David Sheppard in London and Jacob Gronholt-Pedersen in Singapore; Editing by Dale Hudson, David Evans, Peter Galloway, David Gregorio and Jonathan Oatis)