BLBG : Oil Set for Biggest Weekly Gain in 2 Months as Stockpiles Fall
Crude oil rose above $78 a barrel, capping its biggest weekly gain in two months, on an unexpected decline in U.S. gasoline stockpiles and refinery utilization.
Oil advanced for a seventh day after the Department of Energy reported U.S. inventories of the motor fuel tumbled 5.23 million barrels last week, almost five times the decline forecast by analysts and the biggest drop in a year. The dollar continued its descent against the euro, bolstering the investment appeal of commodities.
“We’ve got the fundamental drivers that are needed -- a positive DOE report and further softness in the dollar,” said Mark Pervan, a senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “It certainly has got some upward momentum. The upside is being justified.”
Crude oil for November delivery climbed as much as 59 cents, or 0.8 percent, to $78.17 barrel in electronic trading on the New York Mercantile Exchange. That’s the highest intraday price since Oct. 15, 2008. The contract was at $78.03 a barrel at 12:23 p.m. Singapore time.
Futures are poised to gain 8.7 percent this week, the biggest increase since the week ended Aug. 21, amid signs of a recovery in global energy demand. U.S. gasoline inventories fell to 209.2 million barrels in the week to Oct. 9, a four-week low, the Energy Department said yesterday. Distillate fuel stockpiles also dropped more than forecast.
The stockdraw “completely reverses the cumulative effect of the previous two weeks of softer data,” analysts at Barclays Capital, led by Paul Horsnell, said in a report. “The transition to a $70-to-$80 range is now in full cry.”
Refinery Runs
U.S. refiners reduced processing even as imports decreased, according to the Energy Department. Operating rates averaged 80.9 percent of capacity, down 4.1 percentage points from the previous week, to the lowest since mid-April.
Refiners often idle plants in October for repairs and upgrades as gasoline demand eases and before heating-oil consumption picks up with the Northern Hemisphere winter.
“The market now will swing toward looking at the refinery runs as an indicator of demand,” Pervan said. “It’s at a fairly critically low level. We need to see that turn around because we can’t blame it all on the seasonal slowdown.”
The dollar’s weakness buoyed speculative demand for commodities, including gold. The U.S. currency fell to as low as $1.4967 per euro from $1.4947 in New York yesterday, when it slipped to $1.4968, the lowest since Aug. 13, 2008.
Nigerian ‘Hostilities’
The main rebel group in Nigeria said it resumed “hostilities” against the country’s oil industry and armed forces.
The Movement for the Emancipation of the Niger Delta, which seeks more local control of the region’s oil wealth, started attacking at midnight, spokesman Jomo Gbomo said in an e-mailed statement. He didn’t elaborate.
Rebel attacks on oil infrastructure have curbed Nigeria’s exports by more than 20 percent since 2006. The country, Africa’s most populous nation and a member of the Organization of Petroleum Exporting Countries, is the fifth-largest crude oil supplier to the U.S.
Brent crude oil for December settlement rose as much as 54 cents, or 0.7 percent, to $76.77 a barrel on the London-based ICE Futures Europe exchange. The contract was at $76.53 a barrel at 12:19 p.m. in Singapore. The November contract expired yesterday at $74.45 a barrel.
To contact the reporter on this story: Yee Kai Pin in Singapore at
