Oil Trades Near 3-Day High as Refineries Resume

Oil traded near a three-day high in New York as China’s manufacturing expanded for the first month since July and as U.S. East Coast refineries resumed operations in the wake of superstorm Sandy, boosting crude use.

West Texas Intermediate futures were little changed after closing 0.7 percent higher yesterday. China’s Purchasing Managers’ Index rose to 50.2 in October, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today, adding to signs of growth in the world’s second-biggest crude user. U.S. East Coast refineries accounting for 76 percent of the capacity that was halted or curtailed in Sandy’s path have restored operations or were in the process of doing so as of yesterday.

“Positive PMI data released this morning appears to show that China’s economy is turning a corner after several months of slowdown,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

Crude for December delivery was at $86.42 a barrel in electronic trading on the New York Mercantile Exchange, up 18 cents, at 12:34 p.m. in London. Prices gained 56 cents yesterday to $86.24, the highest close since Oct. 26. Futures are down 13 percent this year.

Brent for December settlement on the London-based ICE Futures Europe exchange was at $108.36 a barrel, down 34 cents. The contract dropped as much as 0.9 percent and has fallen the past three days. The European benchmark crude was at a $21.95 premium to WTI, down from $22.46 yesterday.

Rising Supply

An Energy Department report today may show U.S. crude stockpiles rose to the highest level in three months. The period covered in the report precedes Atlantic superstorm Sandy.

PBF Energy Inc.’s Delaware City, Delaware, and Paulsboro, New Jersey, refineries were operating normally yesterday, according to recorded community hotline messages. The plants, with a combined capacity of 367,200 barrels a day, ran at reduced rates throughout the storm.

NuStar Energy LP (NS)’s 74,000 barrel-a-day Paulsboro asphalt facility in New Jersey was returning to service and is expected to be back to full production by today, according to a statement posted on the company’s website Oct. 30.

Delta Air Lines Inc.’s Monroe Energy LLC 185,000 barrel-a- day Trainer, Pennsylvania, refinery was operating normally, the Energy Department said yesterday. Trebor Banstetter, an Atlanta- based spokesman for Monroe, didn’t respond to an e-mail about the status of the plant.

“Refineries are getting back online quickly, so clearly that is going to remove some of that concern about a temporary oversupply,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “I’m expecting further pressure on prices in the next week or so from inventory builds.”

Gasoline Gains

Gasoline for December delivery in New York gained 1.8 cents to $2.6491 a gallon. It rose 1.48 cents to $2.6303 yesterday while the November contract, which expired, advanced 3.3 cents to $2.7618.

U.S. crude inventories probably increased by 1.8 million barrels to 376.9 million in the week ended Oct. 26, before Sandy struck, according to the median estimate of 11 analysts ahead of the Energy Department report. That would be the highest level since July 20. The weekly data on supplies and output will be published at 11 a.m. Washington time, the department said in an e-mailed statement. It postponed the report by a day because of disruptions caused by Sandy.

Output probably kept climbing after reaching 6.61 million barrels a day in the week to Oct. 19, the most since May 1995, the survey shows. Imports grew 5.7 percent for a fourth weekly increase. Shipments may end their upward trend this week after Sandy shut terminals and closed refineries.

Product Inventories

Gasoline stockpiles are expected to have gained 850,000 barrels to 199.4 million, according to the analyst survey. Distillate-fuel inventories, a category that includes diesel and heating oil, probably fell 1.4 million barrels to 116.6 million.

Production by OPEC, the supplier of about 40 percent of the world’s crude oil, declined in October as Iranian output dropped to the lowest level in 22 years, another Bloomberg survey showed.

Output from the 12-member Organization of Petroleum Exporting Countries slid 87,000 barrels, or 0.3 percent, to an average 32.092 million barrels a day from a revised 32.179 million in September, according to the survey of oil companies, producers and analysts.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

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

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