Brent holds above $109, fall in Cushing stocks offsets weak US data

Tue Feb 25, 2014 10:34pm EST

Related Topics

* Crude stocks at Cushing fall by 1.1 mln barrels - API

* U.S. home price gains slows, consumer confidence drifts lower

* Rockets rain on Libyan power plant as militias battle

* Brent to hover above $109.34 -technicals

By Manash Goswami

SINGAPORE, Feb 26 (Reuters) - Brent futures held above $109 a barrel on Wednesday, drawing support from data showing a steep fall in crude stockpiles at the delivery point for the U.S. benchmark, while weak U.S. economic indicators overnight kept any gains in check.

Investors are assessing the demand outlook for oil when the severe chill over the United States and Europe eases and as refiners take plants down for maintenance after meeting peak winter consumption, weighing on crude demand.

But prices, particularly of the European benchmark, may draw support from prolonged unrest in North African exporter Libya.

Brent crude had slipped 1 cent to $109.50 a barrel by 0307 GMT, after settling $1.13 lower. U.S. oil was unchanged at $101.83, after ending 99 cents down.

"The stocks decrease in Cushing is supporting oil, but we can see some profit-taking coming in because of the recent gains in prices," said Ken Hasegawa, commodity sales manager at Newedge Japan. "Brent is essentially tracking the U.S. benchmark because there are no drivers at the moment. People are looking at Libya."

The price difference between Brent and WTI CL-LCO1=R may hold around $7-$8 a barrel, Hasegawa said. The U.S. benchmark looks set to face some downward pressure as the surge in heating oil demand eases, with prices facing strong support at $100 a barrel.

Brent may swing between $107 and $112 in the absence of any key triggers, Hasegawa added.

More than 100 rockets fired in clashes between rival government-paid militia have knocked out a power plant in southern Libya, in yet another indication of the struggle the government is facing in controlling the unrest.

DEMAND OUTLOOK

U.S. crude stockpiles at the Cushing, Oklahoma, delivery hub fell by 1.1 million barrels, data from industry group the American Petroleum Institute (API) showed, even though overall inventories rose 822,000 barrels.

The gain in the overall stockpiles was lower than analyst expectations for an increase of 1.2 million barrels.

Gasoline stocks fell by 314,000 barrels, compared with expectations in a Reuters poll for a 1-million-barrel decline. Distillate fuels stockpiles, which include diesel and heating oil, fell 693,000 barrels, compared with expectations for a 1.2 million-barrel drop, the API data showed.

Investors are now waiting for data from the U.S. Department of Energy's Energy Information Administration (EIA) to get a clearer picture on the country's oil stockpile.

U.S. home price gains slowed in December, underscoring a loss of momentum in the housing recovery, while consumer confidence drifted lower this month. But the weakness in the housing sector may have been in part due to the bitter cold and severe snowstorms.

"Some U.S. data is good and some is bad," Hasegawa said. "But the overall outlook for the U.S. economy is improving and there seems to be a recovery, which is good for oil." (Editing by Joseph Radford)

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