NEW YORK (Reuters) - Oil rose on Thursday as gains in the stock market and shortcovering helped shake off early losses caused by a rise in U.S. crude stockpiles.
Crude dipped early after U.S. inventory data showed an unexpected build in stockpiles last week, adding to pressure from the dollar’s gain against the euro, which weighed on dollar-denominated commodities.
Crude turned positive in the afternoon as the euro rebounded and stock markets rose, putting Brent crude on track for gains of 13 percent for the year and U.S. oil futures in line for an 8 percent gain.
“The euro got oversold and recovered, but who wants to go home short for the holiday weekend with Iran and all the geopolitical powder kegs out there? This is just a bit of short covering,” said Rich Ilczyszyn, chief market strategist and founder of brokerage iirtrader.com.
Tehran again threatened to block traffic through the Strait of Hormuz, a crucial passage for Middle Eastern crude suppliers after the European Union’s decision to tighten sanctions on Iran over its nuclear program. The U.S. said it would preserve oil shipments in the Gulf.
Brent crude traded up 45 cents to settle at $108.01 a barrel, off earlier lows of $106.50. U.S. crude rose 29 cents to settle at $99.65 a barrel.
Graphic on oil chokepoints: link.reuters.com/dur75s
Refined product futures showed larger gains, supported by the possible shut down of Swiss refiner Petrolplus’ plants after lenders froze $1 billion in credit needed to purchase crude feedstocks. The loss of 4.4 percent of European refining capacity would tighten the market there and possibly draw imports from the United States, analysts said.
Europe’s ICE gasoil futures were up 1 percent, sending cracks to a two-week high. U.S. RBOB gasoline futures and heating oil futures also rose about 1 percent.
U.S. crude stockpiles shot up 3.9 million barrels in the week to December 23, data from the U.S. Energy Information showed, as imports rebounded following shipping delays earlier in the month due to fog in the Houston Shipping Channel. <EIA/S>
While the build was smaller than that reported by the American Petroleum Institute on Wednesday, it comes at a time when refiners typically draw down stockpiles for year-end accounting purposes.
Reporting by Matthew Robinson and Robert Gibbons in New York; additional reporting by Randy Fabi in Singapore; editing by David Gregorio and Andrea Evans