Crude futures extended early gains Wednesday, helped by a weakening dollar, after a government report showed a decline in U.S. crude stockpiles.
Light, sweet crude for February delivery recently traded 87 cents, or 1%, higher at $91.98 U.S. a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 87 cents higher at $98.48 U.S. a barrel.
The U.S. Department of Energy said crude stocks declined by 2.2 million barrels last week, a larger drop than analysts had expected, as stockpiles have traditionally increased at the beginning of the year. However, stockpiles of gasoline and distillates, which include heating oil and diesel, rose, suggesting that the U.S. has plenty of fuel for consumption. Gasoline stocks jumped by 5.1 million barrels, while distillates rose by 2.7 million barrels.
With mixed signals coming from the inventory data, traders turned to the broader economy and a successful auction of Portuguese government debt, which sent the euro higher against the dollar. A weak dollar typically pushes crude prices higher, as it makes oil cheaper for buyers in other currencies. The euro was recently up 0.6% to $1.3059 U.S.
Meanwhile, workers have temporarily restarted the Trans Alaska Pipeline at a lower-than-normal rate Wednesday after it was shut down on Saturday due to a leak. The pipeline, which carries around 630,000 barrels of oil a day from Alaska's North Slope, is a key supplier to refineries on the U.S. West Coast and it expected to be up and running by the end of the week.
Once a bypass segment of pipeline is ready, the pipeline will shut down again for it to be installed, but any delays in the subzero conditions could lead to problems getting crude flowing again. The shutdown has spooked traders worried that refineries may face supply disruptions with any delays.
Brent crude continues to trade at a steep premium to the Nymex-traded contract, due to high supplies in the Nymex delivery point in Cushing, Okla. Brent futures, which are used as a benchmark for much of Europe and Asia, is nearing triple digits for the first time since Sept., 2008.
The difference in price between the two contracts, known as the spread, rose to the highest level in nearly two years Tuesday.
