NYMEX January crude futures settled 98 cents higher at $86.77/barrel Wednesday, as the entire oil complex received a boost from the US Federal Reserve's move to continue its quantitative easing program to stimulate the economy.
January heating oil settled 3.98 cents higher at $2.9668/gal and January RBOB settled 3.6 cents higher at $2.6465/gal.
ICE January Brent settled up $1.49 at $109.50/b.
The US Fed pledged to continue its easing strategy until the unemployment rate dips below 6.5% and inflation tops 2.5%, according to a statement Wednesday after its final decision of 2012.
The bank also said it would accelerate its debt buying program by another $45 billion a month, otherwise known as quantitative easing, which was highly anticipated by market participants.
"[NYMEX] crude is now tracking toward the upper band of a recent trading range around $90," said analyst Gene McGillian of Tradition Energy. "The Fed easing policy definitely pushed crude back to the middle of that band [between $85-90/b]."
For products, some underlying support was seen from news that the 325,000 b/d crude distillation unit at Motiva's Port Arthur, Texas, refinery was shut Tuesday night due to a small fire.
But McGillian said the overall impact from the fire on the futures market was mostly minimal unless the issue leads to a larger setback for the refinery.
"It might not be enough to ratchet up the market just on that news alone because of the anemic demand that we continue to see [for heating oil and gasoline]. But if it is a serious setback then it wouldn't be surprising that it would bid up the market," McGillian said.
Analysts were also noting the potential impact of Philadelphia Energy Solution's plans to close the Girard Point section of its refinery at the end of the month for a 60-day turnaround. Bloomberg reported the closure plan Tuesday, which was attributed to a person familiar with the work.
The maintenance of the refinery comes in the middle of the winter, which is not typical for refiners, said McGillian.
"The market did seem to shrug it off though until there are more signs that demand is rising," he said.
Carl Larry of Oil Outlooks speculated that the refinery is directly affected by rising Brent prices that are pushing its margins lower. He added that the refinery turnaround was pushed up from late February in order to get better margins in a few months.
The bigger impact could be in gasoline, Larry said, where stocks on the US Atlantic Coast were running about 1.7 million barrels below year-ago levels, according to the EIA's latest report for the week ending December 7.
Overall, McGillian said the two refinery reports had some underlying support for products but futures got more of a substantial bid from the Fed news as well as OPEC and International Energy Agency data earlier in the day.
The oil complex was already on an upswing in morning US trade on news that OPEC will maintain its current combined 30 million b/d crude output ceiling into 2013 and also that demand for 2013 is expected to rise, according to the IEA.
Meanwhile, the complex mostly shrugged off the weekly petroleum report from the US Energy Information Administration, which showed builds in gasoline, distillate and crude stocks last week.
US gasoline stocks rose 5 million barrels last week, double analyst expectations, despite an uptick in demand, as refinery runs remained high. At 217.115 million barrels for the week ending December 7, gasoline stocks, which have rose for three consecutive weeks, were at a surplus to the five-year average of nearly 6 million barrels.
Crude stocks rose 843,000 barrels to 372.609 million barrels, contrary to analysts expectations of a 2.5 million-barrel draw.
Distillate stocks jumped 2.986 million barrels last week to 118.055 million barrels, far outpacing analyst estimates of a 1.25 million-barrel build.
