US heating oil and gasoline futures received a lift from news that Motiva's Port Arthur, Texas, refinery, the US largest, aborted a restart of its 350,000 barrel per day (bpd) crude unit after a fractured pipe caused a fire overnight. The Fed's actions, the refinery news and continued Middle East turmoil limited the bearish price reaction to the US government's weekly inventory report showing crude oil stockpiles rose last week, against a forecast stocks would be lower.
Brent January crude rose $2.27 to $110.28 a barrel by 1 pm EST (1800 GMT), having swung from $108.14 to $110.50. The Brent January contract expires on Friday and with three weeks of trading left in 2012, front-month Brent prices need to finish above $107.38 to post a gain for 2012.
January Brent's premium to February Brent reached $1.73 a barrel intraday on Wednesday and Brent's premium to US crude also increased, moving above $23 a barrel during the session. US crude was up $1.56 at $87.35 a barrel, having reached $87.68. US crude remained on track to end the year off around 11 percent from its 2011 close at $98.83.
Central bank stimulus and refinery problems countered any price pressure that would be expected from the Organisation of the Petroleum Exporting Countries' agreement to hold its output target steady despite forecasts for sluggish demand in the first half of 2013. Differences between Saudi Arabia and Iraq about Iraqi production being included in the next Opec production cut agreement surfaced, but did not prevent an agreement on Wednesday's meeting of oil ministers.
Crude oil stockpiles rose 843,000 barrels in the week to December 7, the US Energy Information Administration said in a report on Wednesday. An inventory slide of 2.3 million barrels was forecast in a Reuters survey of analysts. Distillate stockpiles, which include heating oil and diesel, gained 2.99 million barrels, the EIA said, compared with expectations stocks would be up 1.4 million barrels.
Gasoline inventories rose 5 million barrels, against a forecast for a build of 2.2 million barrels. "The report is uniformly bearish with the large refined product inventory increases, along with the rise in crude oil storage," said John Kilduff, partner at Again Capital LLC in New York.