Bloomberg News

Crude Rises a Second Day as Storm May Curb U.S. Gasoline Supply

November 06, 2012

Crude rose for a second day in New York amid forecasts that U.S. gasoline supplies dropped after Hurricane Sandy forced the shutdown of East Coast refineries.

West Texas Intermediate crude advanced as much as 0.9 percent. Gasoline supplies fell 1.5 million barrels, or 0.8 percent, to 198 million in the seven days ended Nov. 2, according to the median of nine analyst estimates before an Energy Department report tomorrow. The fuel advanced as much as 1.4 percent to $2.6571 a gallon. U.S. voters decide today whether to return Barack Obama as president or elect his challenger Mitt Romney.

“The devastation and fuel shortages brought on by Hurricane Sandy are still being felt across the product complex in the U.S.,” said Andrey Kryuchenkov, a London-based analyst at VTB Capital who correctly predicted last month that Brent would slide.

WTI for December delivery climbed as much as 75 cents to $86.40 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $86.02 at 1:23 p.m. London time. The contract traded at $84.34 yesterday, the lowest intraday level since July 12. Prices have dropped 13 percent this year.

Brent for December settlement was 93 cents higher at $108.66 a barrel on the ICE Futures Europe exchange. The European benchmark crude was at a premium of $22.57 to New York- traded WTI.

Brent-WTI

Brent’s premium to WTI has grown amid maintenance at the North Sea fields that underlie the Brent contract.

Morgan Stanley increased its forecast for the Brent-WTI spread in the fourth quarter to about $20 a barrel from $17.50 previously because of the disruptions. The premium will average about $19 in November and December, the bank said in a report e- mailed today.

Fifteen of 16 Forties oil cargoes were deferred in October and at least 60 percent of consignments in November were delayed. That’s an unprecedented number of disruptions, according to a survey of five traders yesterday, three of whom have been involved in this crude market for more than 10 years.

Colonial Pipeline Co. began deliveries from its Linden, New Jersey, fuel tank farm to customers with operable terminals and is working with facilities that haven’t reopened to ensure service is restarted promptly, according to Steve Baker, a company spokesman.

Phillips 66 plans to resume operations at the 238,000 barrel-a-day Bayway plant, the largest single refinery on the U.S. East Coast, after repairing the electrical equipment that was primarily damaged by Sandy, the Houston-based company said on its website. Process units are “in good condition,” it said. The refinery was one of seven plants with a total capacity of 1.29 million barrels a day that halted production or cut rates because of Sandy.

Distillate Drop

Supplies of distillate fuel, a category that includes diesel and heating oil, probably declined 1.25 million barrels, or 1.1 percent, to 116.7 million, according to the median of responses before the Department of Energy report. A decrease of that size would leave inventories at the lowest level since June 2008. All of the respondents forecast a decline.

Crude inventories probably rose 1.5 million barrels, or 0.4 percent, to 374.6 million barrels last week, according to the median of responses in the survey.

Oil in New York has technical support along its lower Bollinger Band around $83.76 a barrel today, according to data compiled by Bloomberg. Futures rebounded after reaching this indicator the past two days, signaling buy orders may be clustered close to it.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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