Oil futures pared their gains Wednesday after a U.S. government report showed oil inventories rising slightly, while oil demand weakened.
Light, sweet crude oil futures for March delivery recently rose $1.43 U.S., or 1.5%, to $99.84 U.S. a barrel on the New York Mercantile Exchange. The contract traded as high as $100.09 U.S. a barrel prior to the 10:30 a.m. EST report from the Department of Energy.
Brent crude on the ICE futures exchange, the European benchmark, recently rose 35 cents U.S., or 0.3%, to $116.58 U.S. a barrel.
U.S. oil inventories last week rose 300,000 barrels, the DOE reported, while an indirect measure of oil demand fell 0.5%. Gasoline inventories grew 1.6 million barrels, while stockpiles of distillates, including heating oil and diesel, climbed 1.2 million barrels.
Analysts polled by Dow Jones Newswires expected an even bigger build of 2.7 million barrels in oil stockpiles. Gasoline stocks were seen rising 100,000 barrels, while stocks of distillates, a category including heating oil and diesel, were expected to fall 900,000 barrels.
Although the build in oil stocks came in below projections, the American Petroleum Institute, an industry group, reported a steep decline in oil inventories late Tuesday, raising expectations for a similar draw in the more closely watched DOE report.
The pullback in oil prices coincided with a strengthening U.S. dollar and a pullback in the equities market, traders said. Both the currency and stock markets have been a major driver of crude prices over the last year.
Despite the pullback, Nymex crude continued to advance above Brent on Wednesday, bucking a recent trading pattern in which Brent crude surged ahead of its U.S. counterpart. Brent has been supported recently by the recent European Union oil sanctions on Iran, which has sent traders in Europe scrambling to find alternative supplies.
Meanwhile, WTI has held steady due to weak oil demand in the U.S. and the prospect of rising oil inventories. Those forces sent the gap between Brent and WTI to more than $20 U.S. a barrel in intraday trading Tuesday, its widest since October.
The gap between the two benchmarks recently narrowed to slightly under $17 U.S. a barrel.
Front-month March reformulated gasoline blendstock, or RBOB, recently rose 1.75 cents, or 0.6%, to $2.9450 U.S. a gallon. March heating oil futures fell 1.28 cents, or 0.4%, to $3.1781 U.S. a gallon.
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