By Virginia Harrison, MarketWatch
NEW YORK (MarketWatch) — Crude-oil futures moved off 11-week lows in electronic trading Wednesday, amid signs of ongoing tensions in the Middle East and ahead of key U.S. inventories data.
Benchmark Nymex light-sweet crude for March delivery (CLH11 84.85, +0.53, +0.63%) rose 28 cents to $84.60 a barrel.
The stabilization came ahead of closely watched inventory figures from the Department of Energy, on the heels of the American Petroleum Institute’s own estimate issued late Tuesday.
It showed the nation’s crude inventories unexpectedly declined by 354,000 barrels in the week of Feb. 11. Analysts polled by Platts had expected oil stockpiles to increase 2.8 million barrels.
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Unfolding protests in the Middle East have underpinned oil prices in recent sessions.
“With the Mideast backdrop likely remaining tense and now engulfing several oil-producing countries, (unlike the case with Egypt), we suspect the path of least resistance, at least for the Brent contract, is higher still,” MF Global Daily Energy analysts said in a note.
Yawning WTI-Brent price differential
Brent for April delivery edged higher in Asian trading hours on ICE Futures in London, adding 0.1% to $101.92 a barrel.
The price differential between two of the major benchmarks for oil, Brent and Nymex West Texas Intermediate, recently hit a record of $16 a barrel.
Analysts believe that inventory trends in Cushing, Okla., are the main reason for the significant price discrepancy.
“We suspect that of the two contracts, Brent is the one picking up the ‘true pulse’ of the energy market, best evidenced in Monday’s action, where prices rose sharply on account of the simmering geopolitical tensions in the Middle East, and the robust Chinese import data that came out earlier in the day,” the MF Global analysts told clients.
