Oil Trims Biggest Monthly Decline Since May After Storm

Oil rose, trimming the biggest monthly decline since May, as refineries started resuming operations after the Atlantic superstorm Sandy moved away from the U.S. East Coast.

West Texas Intermediate futures gained as much as 1.1 percent after advancing 0.2 percent yesterday. Philadelphia Energy Solutions’ 355,000 barrel-a-day Pennsylvania refinery is restoring operations and NuStar Energy LP (NS)’s 74,000 barrel-a-day plant in Paulsboro, New Jersey, will be at full production tomorrow, the companies said. Seven refineries with a total capacity of 1.29 million barrels a day had shut or reduced operations because of Sandy.

“If we think the refineries on the East Coast haven’t suffered material damage and are restarting,” that will support WTI prices, said Torbjoern Kjus, a senior oil analyst at DNB ASA in Oslo, who predicts Brent crude will average $109 a barrel this quarter. “You could argue Sandy should have more negative effects on oil demand than negative effects on supply.”

Crude for December delivery rose as much as 91 cents to $86.59 a barrel in electronic trading on the New York Mercantile Exchange, and was at $86.32 at 12:11 p.m. London time. Prices gained 14 cents yesterday to $85.68, the highest close since Oct. 26. Futures are down 6.4 percent in October and 12.7 percent this year.

Brent for December settlement rose 54 cents to $109.62 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude’s premium to the West Texas Intermediate contract was at $23.30, from $23.40 yesterday.

Price Support

Oil may extend gains in New York after futures settled above the lower Bollinger Band yesterday for the third time in four days, signaling technical support, according to data compiled by Bloomberg. This indicator is at $85.02 a barrel today. Buy orders tend to be clustered near chart-support levels.

Gasoline for November delivery rose as much as 10.12 cents to $2.83 a gallon in New York, the highest level since Oct. 17. The contract expires today. The more-active December future was up 4.32 cents at $2.6587.

Floor trading on the Nymex will resume today after being suspended for a second day yesterday because of the storm, CME Group Inc., the exchange’s owner, said in an e-mail. Electronic trading has operated normally.

East Coast Refineries

Philadelphia Energy’s Pennsylvania refinery “came through the storm without issues,” Cherice Corley, a spokeswoman at the plant, said in an e-mail yesterday. NuStar announced the Paulsboro resumption on its website.

About 308,000 barrels a day of refining capacity remained shut in New Jersey. Production starts at Phillips 66’s 238,000 barrel-a-day Bayway refinery in Linden and Hess Corp. (HES)’s 70,000 barrel-a-day Port Reading plant depend on post-storm assessments, the companies said.

PBF Energy Inc. (PBF)’s Delaware City and Paulsboro facilities “ran well” overnight at reduced rates, said Michael Karlovich, a Parsippany, New Jersey-based spokesman for the company. The plants have a combined capacity of 367,200 barrels a day.

Trebor Banstetter, an Atlanta-based spokesman for Delta Air Lines Inc.’s Monroe Energy LLC, didn’t immediately respond to an e-mail asking about the status of the 185,000 barrel-a-day Trainer, Pennsylvania, refinery. The U.S. Energy Department said the plant was operating at reduced rates as of 8 a.m. local time yesterday.

Buckeye Partners LP (BPL) is starting to return six oil-products pipelines to service after shutting them before Sandy, according to a statement from the company yesterday. The resumptions are conditional on favorable reports about the lines and supply availability, the company said.

Oil Stockpiles

Sandy weakened to a surface trough of low pressure over western Pennsylvania, according to a 5 a.m. advisory issued by the Hydrometeorological Prediction Center in College Park, Maryland. The storm’s remnants are forecast to continue weakening over the state as it now lacks any discernible circulation, and no specific location was stated.

U.S. oil stockpiles rose by 2.1 million barrels to 371.7 million last week, the American Petroleum Institute said yesterday. Crude supplies at Cushing, Oklahoma, the delivery point for Nymex futures, dropped 659,000 barrels to 43.4 million.

The Energy Department postponed release of its inventory report from today. It may publish the data tomorrow, depending on the extent of storm damage and delays, the department’s Energy Information Administration said in an e-mail.

The government report may show crude supplies increased by 1.75 million barrels last week, according to the median of nine responses in a Bloomberg survey of analysts. Gasoline stockpiles fell 500,000 barrels and distillate inventories declined by 1.4 million in the survey.

The industry-funded API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

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 on sev@bloomberg.net

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