Crude-oil futures rose Wednesday as news the European Central Bank is close to outlining a more aggressive stimulus package to boost Europe’s economy stoked hopes of more demand for crude. Light, sweet crude futures for delivery in March rose $1.31, or 2.8%, to settle at $47.78 a barrel on the New York Mercantile Exchange. Futures ended Tuesday down 4.7%. Brent crude for March delivery rose $1.04, or 2.2%, to finish at $49.03 a barrel on London’s ICE Futures exchange, snapping a two-day losing streak. Brent settled 1.7% lower on Tuesday. Oil traders anticipate Thursday’s European Central Bank meeting will bring forward a decision on the size and scope of a bond-buying program, said Tim Evans, an oil analyst with Citi Futures.
The Wall Street Journal reported that a bond-buying program on the table to help juice the eurozone would see monthly bond purchases of about €50 billion ($58 billion) for at least a year. Closer to home, stronger-than-expected U.S. housing starts may have also been considered a sign of improving demand prospects, Evans said in a note Wednesday.
On the supply side, the U.S. Energy Information Administration will report on crude and crude derivatives inventories on Thursday, a day later than usual due to Monday’s Martin Luther King holiday. Analysts polled by Platts expect the EIA to show crude-oil inventories up 2.5 million barrels on the week ended Jan. 16. Gasoline stocks are seen up 1.05 million barrels, while distillate stocks, which include heating oil, are expected to have increased by 167,000 barrels. U.S. oil production has been driven higher by the shale boom that has contributed to much of the current global crude oversupply, and the subsequent decline in oil prices. Oil markets are looking for signs that spending cuts by oil companies might help shrink the global oil glut. Earlier Wednesday, Australia’s BHP Billiton Ltd. flagged up to $250 million in write-downs on its petroleum business and indicated a sharp reduction in U.S. drilling activity.
The Baker Hughes rig count, a measure of U.S. drilling activity, was down 74 to 1,676 in the week to Jan. 16, the lowest level in 16 months and below the previous year’s level of 1,768, according to Mizuho Securities. Elsewhere in energy trading, March natural-gas futures rose 14 cents, or 5%, to settle at $2.9740 per million British thermal units. That put an end to a three-session losing stretch for natural gas. Futures lost 10% on Tuesday.
Western U.S. states are expected to see warmer-than-normal weather, while there’s an increasing likelihood of colder weather in key heating markets in the East Coast, which has fueled natural gas’s Wednesday rebound, said Matt Smith, an analyst with Schneider Electric. Natural-gas prices are up 3% so far this month.
Gasoline for February rose 1 cent, or 1%, to settle at $1.3255 a gallon on Nymex. February heating oil gained 2 cents, or 1.2%, to end at $1.6464 a gallon on Nymex.