Oil prices jump 6 percent on U.S. stockpile draws, Keystone

Fri Apr 8, 2016 5:42pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices rose more than 6 percent on Friday to end with the biggest weekly gain in a month as drawdowns in U.S. crude stockpiles fed hopes that a punishing global oversupply may be approaching a tipping point after nearly two years.

The shutdown of the Keystone crude pipeline to Cushing, Oklahoma supported U.S. crude futures. Oil also drew support after Russia said its crude output fell in April, ahead of a meeting of major oil-producing countries in Doha aimed at freezing output.

U.S. gasoline and diesel prices rallied more than 5 percent each. U.S. crude has mostly gained this year from cheap gasoline pump prices and benign driving weather. Ultra low sulfur diesel, also known as heating oil, rebounded this week on forecasts for seasonably cold weather through late April.

Brent crude futures settled up $2.51, or 6.4 percent, at $41.94 a barrel, hitting a session high above $42.

U.S. crude futures closed up $2.46, or 6.6 percent, to $39.72. Earlier, it rose to nearly $40.

For the week, both benchmarks rose about 8 percent, their most since the week ended March 4.

"We are starting to draw crude inventories in the U.S." said Scott Shelton, energy broker with ICAP in Durham, North Carolina. "Run rates are rising and U.S. production is falling."

"This is very different I think than what was expected. The market perceives that these draws may continue as the Keystone outage will increase the likelihood," Shelton said.   Continued...

A female employee fills the tank of a car at a petrol station in Cairo, Egypt, February 24, 2016. REUTERS/Mohamed Abd El Ghany