Crude-oil prices were rising for a third day Wednesday as ongoing tensions in the Red Sea support increases even after a federal report showing an increase in oil, gasoline and diesel supplies last week.

Refined product contracts have surrendered earlier gains and were essentially flat about an hour after the release of the latest inventory data by the U.S. Energy Information Administration.

Crude prices were seeing gains of about $1/bbl at 11:40 a.m. EST, with the February contract for West Texas Intermediate adding $1.03 to $74.97/bbl in its first session in the front-month position. The March contract was 88cts ahead to $75.09/bbl. Prices are about 40cts off session highs.

February Brent crude was seeing gains of 93cts to $80.16/bbl while March gains were lagging a bit, climbing 74cts to $80.11/bbl.

ULSD futures were struggling to remain in positive territory, with the January contract ahead 0.28ct to $2.7196/gal, about 5cts off its earlier high. The

February contract was 0.6ct higher to $2.6954/gal. RBOB futures had also pulled back from session peaks, with the January contract down 0.12ct to $2.1996/gal, about 1.5cts off its previous high, while February prices sank by 0.19ct to $2.2046/gal.

Energy prices have risen in four of the last five trading sessions as Houthi attacks on shipping in the Red Sea have resulted in companies diverting vessels to longer routes around Africa and spurred the creation of a regional naval task force led by the U.S. Reports indicate the U.S. and other nations are considering military action in response to the attacks, raising the possibility of additional disruptions to shipping in the region.

That news has largely overshadowed EIA's inventory data, which showed a 2.9 million bbl increase in U.S. crude inventories as U.S. production rose to 13.3 million b/d during the week ending Friday.

Gasoline inventories rose by 2.7 million bbl while distillate supplies increased by 1.5 million bbl, placing inventories about 10% below seasonal averages.

The build in product inventories came as U.S. refineries operated at 92.4% of capacity, an increase of more than two percentage points from the previous week.

Implied gasoline demand fell slightly during the week, but remained strong at 8.75 million b/d. Distillate demand rose by about 50,000 b/d to 3.82 million b/d.

While diesel prices in spot markets around the country are generally sticking close to the movement of futures prices, gasoline prices are seeing large deviations in the Group 3 and San Francisco markets.

Prompt CBOB prices in Group 3 were off by about 2.5cts/gal, sending discounts to the NYMEX price down to more than 21cts/gal. In San Francisco, prices for January-timing CARBOB were jumping by 14cts/gal, sending premiums to 16cts over the February RBOB contract.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

December 20, 2023 12:46 ET (17:46 GMT)