Oil jumps almost 2 percent after European storage data
Oil prices surged almost 2 percent on Tuesday along with rising gasoline and heating oil futures after a report showed European product stockpiles fell despite an increase in refinery crude runs.
European refineries increased their crude oil intake in June, but stocks of oil products, particularly diesel, slid, Euroilstock data showed on Tuesday.
"That tells you demand globally is a lot stronger than people thought it was going to be and that is having a net positive effect on heating and gasoline prices," said Scott Shelton, energy specialist at energy brokerage ICAP in Durham, North Carolina.
Benchmark Brent futures were up 84 cents, or 1.8 percent, at $47.72 a barrel by 12:15 p.m. EDT (1615 GMT), while U.S. West Texas Intermediate crude was up 82 cents, or 1.9 percent, at $45.22 per barrel.
U.S. heating oil futures were also up almost 2 percent at midday. This boosted the products crack spread measure of refinery margins to the highest since late May.
The European inventory report came ahead of weekly data on U.S. crude inventories. The American Petroleum Institute (API) reports on Tuesday afternoon and the U.S. Energy Information Administration reports Wednesday morning.
Analysts polled by Reuters forecast that U.S. crude inventories fell 3.2 million barrels while gasoline and distillate stocks each rose by 1.5 million barrels.
Crude prices had slipped in earlier trade, pressured by bank forecasts for declines this year and in 2018.
BNP Paribas slashed its forecasts for Brent by $9 to $51 a barrel for 2017 and by $15 to $48 for 2018. Barclays cut its 2017 and 2018 Brent forecasts to $52 a barrel for both years from $55 for 2017 and $57 for 2018.
Crude prices remain about 17 percent below 2017 opening levels despite a deal led by the Organization of the Petroleum Exporting Countries to cut production from January.
OPEC agreed with Russia and some other major exporters to cut output about 1.8 million barrels per day (bpd) until March 2018. But production elsewhere has risen as OPEC has held back.
U.S. oil production has jumped more than 10 percent over the last year to 9.34 million bpd. Nigeria and Libya, OPEC members exempt from production limits, have also increased output.
Without a significant fall in oil inventories or a decline in U.S. drilling and production, Goldman Sachs said U.S. crude could drop below $40 per barrel.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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