Oil ends higher on ECB plan, supply report

Prices lose steam, however, as session progressed

Oil ends higher on ECB plan, supply report
Prices lose steam, however, as session progressed


SAN FRANCISCO (MarketWatch) — Crude-oil futures rose Thursday as traders cheered the European Central Bank’s plan to buy bonds from beleaguered euro-zone countries, and after a report showed a larger-than-expected drop in supplies.

Further support came from positive macroeconomic reports from the U.S. With prices getting closer to $98 a barrel, however, oil faced some headwinds and ended just modestly higher.

Crude futures for October delivery CLV2 -0.28% gained 17 cents, or 0.2%, to $95.53 a barrel on the New York Mercantile Exchange. It had traded as high as $97.71 a barrel earlier.

Despite the slew of positive news, it’s unlikely that oil will return to $100 a barrel in the short term, said Matt Smith, an analyst with Summit Energy in Kentucky. “We are nearing the top of the range, there’s not enough strength on the demand side to push us on to triple digits,” he said.

The Energy Information Administration reported a decline of 7.4 million barrels in crude supplies in the week ended Aug. 31, which closely matched a trade group’s report a day earlier.

Analysts polled by Platts had expected a decline of 5 million barrels.

Oil had traded at $97.36 a barrel moments before the data.

The EIA also reported gasoline stockpiles dropped 2.3 million barrels, and supplies of distillates rose 1 million barrels.

Gasoline for October delivery RBV2 +1.28% added 4 cents, or 1.4%, to settle at $2.99 a gallon.

October heating oil HOV2 -0.16% gained 2 cents, or 0.8%, to end at $3.14 a gallon.

The analysts surveyed by Platts had expected to see gasoline inventories down 3.5 million barrels and distillate supplies down 1.5 million barrels.

The EIA report was a day later than usual due to the Labor Day holiday.

The agency also reported on natural-gas supplies on Thursday, showing an increase of 28 billion cubic feet for the week. Analysts had expected an increase around 36 bcf.

October natural gas NGV12 -2.88% declined 2 cents, or 0.7%, to settle at $2.78 per million British thermal units. Prices had seesawed between gains and losses.

Earlier Thursday, ECB President Mario Draghi detailed the bond-buying plan, to counter what he described as “unfounded fears” about the viability of the euro.

A weaker dollar also offered some support for energy commodities. The ICE dollar index DXY -1.12% , which measures the greenback against a basket of six rival currencies, declined to 81.086 from 81.253 late Wednesday.