Oil Trades Near Three-Day High; Gasoline Drops as Irene Hurricane Passes
Oil traded near a three-day high in New York as investors speculated that growth will recover in the U.S., spurring demand in the biggest crude consumer. Gasoline slid as Irene was downgraded to a post-tropical cyclone.
Futures fluctuated after climbing as much as 0.5 percent. Growth is safe in the long run and the central bank can still aid recovery, Federal Reserve Chairman Ben S. Bernanke said Aug. 26. Refineries along the East Coast were operating plants at or near normal levels after Irene weakened. London’s Brent dropped as Libyan rebels claimed full control of oil fields.
“Bernanke is suggesting that there are some good, some negative economic indicators and there is a chance of a double- dip, but overall he feels that the base has been laid for long- term growth,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who predicts crude in New York will average $100 a barrel this year. “You’ll find over the next three to six months there’ll be a marked improvement in terms of Libyan production.”
Crude for October delivery was at $85.66 a barrel, up 29 cents, in electronic trading on the New York Mercantile Exchange at 2:18 p.m. Singapore time. The contract gained 7 cents on Aug. 26 to $85.37, the highest since Aug. 23. Prices are 15 percent higher the past year.
Brent oil for October settlement slid 21 cents to $111.15 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $25.45 to U.S. futures, compared with a record $26.21 on Aug. 19.
Irene Weakens
Irene was 105 miles (170 kilometers) south of Quebec City with winds of 50 miles per hour and moving north-northeast at 26 mph, according to an advisory issued by the National Hurricane Center before 11 p.m. East Coast time. The storm killed at least 18 people from Puerto Rico to Connecticut, sent rivers to near- record heights and knocked out power to more than 4 million customers.
Hess Corp. said its Port Reading refinery in New Jersey returned to normal rates while NuStar Energy LP aimed to start its Paulsboro, New Jersey, plant today, the company said. PBF Energy Co. said it ran its New Jersey and Delaware plants “all through the storm.” ConocoPhillips’s 238,000 barrel-a-day Bayway plant in New Jersey remained shut and Sunoco Inc. ran its Philadelphia and Marcus Hook facilities at reduced rates.
Gasoline Prices
Gasoline for September delivery dropped as much as 2 percent today to $2.8765 a gallon in electronic trading on the New York Mercantile Exchange, extending a 1.1 percent drop on Aug. 26. Motor fuel prices climbed 4.7 percent from Aug. 22 to Aug. 25 on concern the cyclone would damage refineries in the U.S.’s biggest consuming area, home to about 65 million people.
Gasoline crack spreads, or the measure of the product’s premium to West Texas crude oil, dropped 5.2 percent to $29.98 a barrel after climbing 8.1 percent in the lead up to the storm.
Brent crude’s premium to New York’s West Texas Intermediate crude shrank the most in five weeks on Aug. 22 after rebels in Libya entered Tripoli, paving the way for the country’s oil production to resume.
Nouri Balroin, the head of the National Transitional Council’s production unit, said some lost output will start within three weeks, Al Jazeera reported Aug. 27. A three-stage plan will restore the flow of oil to 1.6 million barrels a day within 15 months, he said, according to the Qatar-based network.
The Libyan revolt, which began in February, has reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell to 100,000 barrels a day last month, a Bloomberg News survey showed. That’s less than 10 percent of the 1.6 million barrels the nation pumped in January, before the uprising.
Net-long positions in crude oil traded in New York gained 0.3 percent to 143,195, the first increase after four weeks of declines, according to data from the Commodity Futures Trading Commission’s Aug. 26 Commitments of Traders report.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
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