Oil futures split paths for the session, but tally a 2nd monthly rise in a row - MarketWatch

Oil futures split paths on Thursday, with U.S. prices extending gains from a weekly drop in domestic crude supplies, while global benchmark prices finished lower on weaker Chinese economic data, which fed concerns over a demand slowdown.

Both benchmarks, however, finished the month higher, up a second consecutive month.

April West Texas Intermediate crude CLJ9, +0.60% rose 28 cents, or 0.5%, to settle at $57.22 a barrel on the New York Mercantile Exchange. Based on the front-month contracts, prices climbed 6.4% for the month of February, according to Dow Jones Market Data. April WTI had jumped 2.6% Wednesday, for the biggest one-day dollar and percentage increase since Feb. 1.

Global benchmark April Brent LCOJ9, -0.56% which expired at Thursday’s settlement, fell 36 cents, or 0.5%, to $66.03 a barrel on ICE Futures Europe. Front-month prices rose 6.7% for the month. May Brent LCOK9, -0.26% which is now the front month, settled at $66.31, down 27 cents, or 0.4%.

Prices for both benchmarks gained Wednesday after Saudi Arabia affirmed its commitment to reducing output, then got an added boost after data revealed an unexpected weekly drop in U.S. crude supplies — the first decline in six weeks.

Oil demand uncertainty, however, was on the rise Thursday after an official gauge of China’s factory activity fell to the lowest level in three years, as production contracted likely due to the Lunar New Year holiday, while external demand weakened further.

“Major non-[Organization for Economic Cooperation and Development] markets like China and India continue to account for a disproportionately large share of new crude demand, allowing any increase in economic uncertainty in those countries to quickly cut into crude prices at large,” said Robbie Fraser, global commodity analyst at Schneider Electric, in a note.

What’s more, U.S. stock indexes on Thursday traded lower after President Donald Trump said talks with North Korean leader Kim Jong Un aimed at reducing that communist country’s nuclear weapons broke down abruptly.

But in the U.S., GDP grew at a 2.6% annual pace in the fourth quarter, better than the 1.9% growth rate forecast by economists polled by MarketWatch.

As for the supply side, the Energy Information Administration on Wednesday reported that U.S. crude supplies unexpectedly dropped by 8.6 million barrels. The decline followed five straight weeks of increases and surprised most market forecasters, who expected an increase in stockpiles. The American Petroleum Institute data on Tuesday showed a decline of 4.2 million barrels.

Supplies of gasoline fell by 1.9 million barrels, while distillates edged down by 300,000 barrels last week, according to the EIA.

On Nymex, March gasoline RBH9, +0.75%  shed 0.3% at $1.629 a gallon, for a monthly rise of more than 19%, and March heating HOH9, +0.38%  added about 0.1% to $2.024 a gallon—ending 7.7% higher for the month. The March contracts expired at the end of the day’s session.

The energy minister of Saudi Arabia, Khalid al-Falih, this week reiterated his country’s commitment to cutting output to rebalance the market. Saudi Arabia is viewed as the de facto leader of the Organization of the Petroleum Exporting Countries because it is the biggest producer of the oil cartel and holds the most political sway in the group.

Saudi’s minister also implied that production cuts could be extended into the second half of 2019.

OPEC and 10 producers outside the cartel, led by Russia, agreed late last year to hold back crude output by a collective 1.2 million barrels a day for the first six months of the year. Saudi Arabia has shouldered the largest burden of those cuts, coming down by around 350,000 barrels a day last month, according to OPEC.

Read: What oil-tanker rates can tell readers about OPEC members’ compliance with cuts

Rounding out action in the energy market, April natural gas NGJ19, +0.21% settled at $2.812 per million British thermal units, up 0.5% for the session, but with front-month prices down less than 0.1% in February.

Prices have plunged by 39% over the last three months, marking the largest three-month percentage decline since Sept. 2008, according to Dow Jones Market Data.

The EIA reported Thursday that domestic supplies of natural gas fell by 166 billion cubic feet for the week ended Feb. 22. That was a bit less than the 171 billion cubic foot decline forecast by analysts polled by S&P Global Platts.

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