NYMEX crude in eight-week high, products surge
NEW YORK, March 4 (Reuters) - Front-month crude oil futures on New York Mercantile Exchange rallied to eight-week highs midday Thursday, surging on shortcovering in a technically driven market, traders said.
At 1244 EST/1744 GMT, NYMEX crude for April delivery was up 50 cents at $13.45 a barrel after having broken through resistance at $13.25 and reaching an intraday high of $13.39, its highest since early January. The contract has traded as low as $12.82.
The front month contract has gained more than a dollar since Tuesday, in part due to a big drop in U.S. crude stocks in the Feb 26 week and some bullishness from a shutdown of a major Iraqi export pipeline after U.S. bomb attacks in northern Iraq on Sunday and Monday.
While the pipeline resumed operations early Thursday traders said the market had discounted it as reports were rampant on Wednesday that the line would go back up late that day.
That left the market only the draw in crude stocks from last week and perhaps some hopes of an OPEC production cut to push the market higher, said Tim Evans, senior analyst at Pegasus Econometric.
But even those reasons appeared weak, according to other analysts.
"It's hard to see any fundamental reason for the current rally," said Cresvale International analyst Tom Bentz, although he noted that OPEC news focusing on the need for further production cuts was positive.
"A lot of people are still short and are covering and some people are getting long," he noted, adding that a convincing move to the upside was validated Wednesday when NYMEX front month crude hit $12.80. April crude hit an intraday high of $12.99 on Wednesday and settled at $12.93.
Bentz and other market participants said it was possible for the front month contract to hit $13.75, the intraday high struck on Jan. 11. The nearby resistance is at $13.50, the intraday high hit on Jan. 12, they said.
Heating oil and gasoline futures racked up heavy gains for a third day in a row.
Front month heating oil, which has gained almost three cents since Monday, was at 34.80 cents a gallon, up 1.25 cents, traded 35.10/33.40 cents.
April gasoline, which has added more than 3.5 cents since the start of the week, traded at 41.30 cents, up 1.39 cents. The contract moved within the 39.75/41.20-cent range.
In London, April Brent crude jumped to $11.66, up 41 cents moving up an the back of the NYMEX crude and products rally.
Earlier this week, U.S. air attacks in the so-called "no-fly" zone in northern Iraq had struck a communications unit that caused a temporary shutdown of Iraq-Turkish pipeline.
An Iraqi oil ministry spokesman did not give details but an industry source told Reuters separately that the line was running at a rate of 575,000 bpd, below its peak of 950,000 bpd before the air strikes.
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