Oil prices rose on Thursday as Britain's largest oilfield was shut down for the second time in less than a week, and as a major US refinery prepared to re-start this month. US crude's discount to international benchmark North Sea Brent also narrowed after Genscape reported that oil stocks at the major US Cushing, Oklahoma delivery hub fell by more than a million barrels between May 31 and June 4.
--- Oil stocks at Cushing drop over 1m barrels
--- Brent premium to US oil dips
US crude also garnered support after BP Plc said an unit at the centre of a $4-billion revamp of its 405,000 barrel per day (bpd) Whiting, Indiana, refinery is on schedule to restart by the end of June. Brent crude oil futures for July settled 57 cents higher at $103.61 a barrel. US oil settled up $1.02 higher at $94.76 per barrel. The Brent-WTI spread dropped precipitously at around 9 am EDT, to $8.50 from nearly $9, in 20 minutes, before easing in to a range of $8.60 to $8.90.
The spread settled at $8.85 on Thursday, after swinging between around $7 and $10 in the past three weeks. "Genscape showing a million-barrel draw, I think that's lent some bullish sentiment to US crude, along with the news on Whiting," said Andy Lebow, vice president at Jefferies Bache in New York. The 200,000 bpd Buzzard oilfield in the UK North Sea has suffered a production outage, its operator Nexen said on Thursday, the second in less than a week. Buzzard had restarted earlier this week following an equipment failure.
The head of the European Central Bank said Thursday it would continue its policy of monetary easing, sending the euro to a one-month high against the dollar. ECB President Mario Draghi told a news conference the bank's easy monetary policy "should continue to support prospects for an economic recovery later in the year." "Draghi's comments came out this morning and you saw a pop in the euro. That's certainly lending support," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania.
A weaker dollar makes dollar-denominated commodities such as oil cheaper for holders of other currencies. Stronger gasoline futures prices also propped up crude oil after government data on Wednesday showed that inventories fell unexpectedly, especially in the densely populated US East Coast, as the summer driving season kicks off, Schork said "It's the season for gasoline. The bulls tried to buy that number from the (US Energy Information Administration)." Gasoline futures settled up 1 percent or 2.79 cents at $2.8509 a gallon.
Data showing fewer Americans filing new claims for unemployment benefits supported prices, pointing to moderate job growth and more economic activity ahead. The market awaits US government data due on Friday which is expected to show jobs outside the farming sector increased by a lacklustre 170,000, according to a Reuters survey of economists. The oil market was also paying some attention to US National Hurricane Centre updates on Tropical Storm Andrea, which was headed for the Florida coast.
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