US crude surges $1.76/bbl on oil demand forecasts

HOUSTON (ICIS)–NYMEX light sweet crude for March delivery settled at $96.73/bbl, up $1.76, on Wednesday in response to recently released optimistic global oil-demand forecasts from various agencies

Investors acquired length as the International Monetary Fund (IMF) joined the International Energy Agency (IEA) in raising estimates for oil-demand growth, with industrialised nations rather than emerging economies leading the recovery.

Also providing underlying support, TransCanada announced that the southern leg of the Keystone pipeline, which will move crude oil from the Cushing, Oklahoma, NYMEX delivery hub to the Gulf Coast, has become operational. The line is expected to alleviate the glut at the storage-tank farm and help prop up the price of the benchmark as inventories decrease.

On the first session as spot month, upside momentum forced the March West Texas Intermediate (WTI) contract to penetrate technical barriers, triggering buy-stops and extending the gains.

The feeding frenzy received a boost from extremely cold weather affecting the US northeast, which resulted in a healthy rally in natural gas markets, futures and physical, partially based on scarcity pricing due to infrastructure delivery issues.

Expectations of refinery turnarounds during the spring of 2014, which would bring several refinery units off line, failed to slow down the momentum.

An intra-day high of $96.89/bbl, up $1.92, was established before the upside was exhausted and a portion of the gains were given back.

ICE Brent for March delivery topped out at $108.33/bbl before settling at $108.27/bbl, up $1.54.