Oil prices settle at nearly 2-month high after drop in U.S. output and

Oil futures rose Thursday to settle at their highest prices since late November after government data showed larger-than-expected drops in U.S. crude inventories and production.

Price moves

  • West Texas Intermediate crude for March delivery



    rose $2.27, or 3%, to settle at $77.36 a barrel on the New York Mercantile Exchange.

  • March Brent crude

    the global benchmark, climbed $2.39, or 3%, at $82.43 a barrel on ICE Futures Europe. Brent and WTI oil settled at their highest levels since late November, according to Dow Jones Market Data.

  • February gasoline

    added 2.5% to $2.26 a gallon, while February heating oil

    rose 4.2% to $2.80 a gallon.

  • Natural gas for February delivery

    settled at $2.57 per million British thermal units, down nearly 2.7%.

Oil market drivers

“News flow this week has been almost universally bullish for oil prices and were seeing futures begin to meaningfully rally for the first time in months,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

Oil was building on gains scored the previous session after the Energy Information Administration reported on Wednesday a much larger than expected drop in U.S. crude inventories of 9.2 million barrels in the week ended Jan. 19.

The agency also reported U.S. crude output dropped back 1 million barrels a day, or mbd, to 12.3 mbd last week, pulling back from record output the previous week.

Oil production fell to a 6-month low, said Richey, due to freezing temperatures in the northern U.S.

Read: Oil traders care more about North Dakota weather than Red Sea missile attacks

Overseas, Ukrainian forces have ramped up attacks on Russian oil and gas infrastructure, “disrupting export operations [and] lowering available oil supply globally,” he said. In the Middle East, attacks on ships in the Red Sea by Houthi rebels backed by Iran, continue to “interfere with global shipping routes, including seaborn crude oil cargoes.”

The increasingly “backwardated nature of the oil futures market has offered a real-time read of the increasing concern about an emerging supply deficit in the global oil market,” said Richey. Backwardation means that oil prices in the spot market are higher than those for later deliveries.

Also see: Uranium prices have quadrupled. So why are mining stocks lagging? 

The EIA Wednesday also said gasoline inventories rose 4.9 million barrels and gasoline supplied, a measure of demand, dropped 388,000 barrels a day to 7.88 mbd in the latest week.

That’s a 1-year low and the 4-week moving average of gasoline supplied indicates “a meaningful drop…

Read More: Oil prices settle at nearly 2-month high after drop in U.S. output and

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