Oil Snaps Three-Day Decline in New York; Keystone Curbed

Oil snapped a three-day decline in New York while London’s Brent futures swung between gains and losses. The Keystone pipeline won’t resume full deliveries until next month after a shutdown.

Front-month futures traded 0.3 percent higher after losing 3.7 percent since Oct. 17 to settle at the lowest in more than two weeks yesterday. Brent crude fell as much as 0.2 percent and rose 0.3 percent. Prices fluctuated before reports tomorrow that may show new home sales in the U.S. in September rose to the highest in more than two years and crude stockpiles advanced.

“The markets said that given where we are, it could just be a little bit overdone,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “It’s been quite a dramatic decline.”

Crude for December delivery was up 25 cents at $88.90 a barrel in electronic trading on the New York Mercantile Exchange at 3:03 p.m. in Singapore. It earlier rose as much as 64 cents. The November contract fell 1.5 percent yesterday to $88.73, the lowest close since Oct. 3. Prices are down 10 percent this year.

Brent for December settlement was 15 cents higher at $109.59 a barrel on the London-based ICE Futures Europe exchange after losing 70 cents to settle at $109.44 yesterday. The European benchmark crude was at a premium of $20.72 to the New York-traded West Texas Intermediate grade, compared with $20.79 yesterday.

New York prices halted their slide after nearing technical support along the lower Bollinger band. Buy orders tend to be clustered near chart-support levels. The band was at about $87.04 a barrel today.

Keystone Pipeline

The 590,000 barrel-a-day Keystone pipeline started yesterday, James Millar, a TransCanada Corp. (TRP) spokesman based in Calgary, said in an e-mail. Keystone will operate at reduced pressure for 24 hours or less to complete additional testing, Millar said. TransCanada will trim October volumes and return to contractual delivery levels in November.

TransCanada shut down Keystone on Oct. 17 after routine maintenance testing revealed an “anomaly” on the outside of the line. The pipe runs 2,150 miles (3,459 kilometers) from Hardisty, Alberta, to Wood River and Patoka, Illinois, and to the main U.S. oil storage hub in Cushing, Oklahoma.

Purchases of new homes in the U.S. probably rose in September to their highest level since April 2010, a sign the industry that helped trigger the recession in the biggest oil- consuming country is recovering.

Sales, tabulated when contracts are signed, climbed 3.2 percent from August to a 385,000 annual pace in September, according to the median estimate in a Bloomberg survey of 75 economists and analysts. The Commerce Department report is scheduled to be released tomorrow in Washington.

Oil Inventories

U.S. oil inventories probably advanced for a third week after crude output climbed to the highest level in more than 17 years, according to the median of nine analyst estimates before an Energy Department report tomorrow.

Crude inventories grew by 1.8 million barrels, or 0.5 percent, to 371 million in the seven days ended Oct. 19, the Bloomberg survey showed. A gain of that size would leave stockpiles at the highest level since July.

Tropical Storm Sandy was forecast to become a hurricane tomorrow as it lingered over the southwestern Caribbean Sea, while a second system began to develop in the Atlantic.

Sandy, with top winds of 45 miles per hour, was about 385 miles south-southwest of Kingston, Jamaica, according to a U.S. National Hurricane Center advisory at 11 p.m. New York time yesterday. The system is forecast to pass east of Florida.

Sandy is the 18th named storm of the Atlantic hurricane season, which ties 2012 with 1969 as the fourth-most active on record. A 19th storm is expected to develop from a tropical depression 750 miles east-northeast of the Leeward Islands, with winds of 35 mph. It’s not forecast to reach the U.S.

U.S. Gasoline

Crude prices continued to outpace gasoline that was 0.1 percent higher at $2.6511 a gallon in New York. Futures for the motor fuel have dropped 21 percent this month, compared with a 3.4 percent slide in oil.

Prices were little changed after capping an eighth day of losses yesterday, the longest series of declines since February 2006, on speculation that supplies will increase as refineries start units after repairs.

Gasoline futures sank to the lowest level since July 2 as Exxon Mobil Corp. resumed operations on a coker at the Joliet, Illinois, refinery after an Oct. 19 upset. Valero Energy Corp. (VLO) and Citgo Petroleum Corp. are starting units following maintenance at the McKee and Corpus Christi, Texas, plants.

To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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