West Texas Intermediate crude futures rise from their lowest price in a week on 24 February.
West Texas Intermediate (WTI) crude futures rise from their lowest price in a week on 24 February.Reuters

Crude oil futures gained with the West Texas Intermediate rising from its lowest price in a week, anticipating that cold weather in the US will boost heating demand.

The WTI contract for delivery in April rose as much as 50 cents to $102.70 a barrel in electronic trading on the New York Mercantile Exchange and hovered at $102.43 at 08:41GMT.

The volume of all futures traded was some 4% above the 100-day average. Prices are up 4% this year.

WTI finished at $102.20 a barrel on 21 February, the lowest since 14 February.

The Brent contract for delivery in April added about 39 cents, or 0.4%, to $110.24 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $7.56 to the WTI, according to contracts traded on ICE.

Brent ended at $109.85 a barrel on 21 February.

Cold Wave Persists

Arctic air would return to the US Northeast and Midwest this week, according to AccuWeather.

Another gust of freezing air is forecast for the central and eastern US this week as two storms could bring snow to the Northeast, according to the National Weather Service.

"The primary factor for WTI has been the inventory draw-downs, which has materially narrowed the discount to Brent at the front of the curve," said Guy Wolf, global head of market analytics at Marex Spectron Group in London.

"Macro shocks notwithstanding, we are broadly positive on crude prices at the moment. Demand appears robust and supply doesn't appear to be able to react quickly," Wolf told Bloomberg.

Bullish Bets

Hedge funds invested big money in gold and crude oil as prices rallied last week, propelling the bullish money wagered by commodity speculators to the highest level since 2011, data showed.

Total net-long money in US crude rose by $2.6bn, accounting for 20% of the total growth in weekly net longs of managed money. Open interest in NYMEX crude declined by 2.8%.

Gasoline, natural gas and soybeans also attracted huge buying during the week to 18 February, data from the US Commodity Futures Trading Commission (CFTC) showed on 21 February.

Cushing Inventory

Crude inventory at Cushing, Oklahoma, the delivery point for WTI contracts, fell to their lowest level since October 2013 in the seven days to 14 February, government data showed.

Stockpiles at Cushing declined by 1.73 million barrels to 35.9 million in the period ended 14 February, the Energy Information Administration said last week. US crude inventories expanded by 973,000 barrels to 362.3 million.

Distillate stockpiles, including heating oil and diesel, fell by 339,000 barrels to 112.7 million, a sixth weekly decline, according to EIA data.

The opening of the southern portion of TransCanada's Keystone XL pipeline in January has helped ease a supply bottleneck in the central US.