Oil rose from the lowest level in almost four months as refineries restored production after Hurricane Sandy tightened fuel supplies.
Prices snapped a three-week loss as four of the six Northeast refineries that were forced to close because of Sandy resumed output. Gains accelerated in the final 15 minutes of floor trading as gasoline jumped and Brent oil in London climbed on unprecedented delays in North Sea Forties shipments.
“Refineries are kicking back up and it’s a little supportive for oil in the short term,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “Market’s sold off quite a bit and you probably have value investors coming in.”
West Texas Intermediate oil for December delivery rose 79 cents, or 0.9 percent, to settle at $85.65 a barrel on the New York Mercantile Exchange. The contract ended at $84.86 a barrel on Nov. 2, the lowest settlement since July 10. Prices have dropped 13 percent this year.
Brent oil for December settlement increased $2.05, or 1.9 percent, to end the session at $107.73 a barrel on the ICE Futures Europe exchange.
Three refineries in New Jersey, Delaware and Pennsylvania with a total capacity of 527,200 barrels a day returned to normal operations last week and Philadelphia Energy Solutions’ 335,000-barrels-a-day plant in Philadelphia was producing at reduced rates as of today, according to the Energy Department.
Hess Corp. (HES)’s Port Reading and Phillips 66’s Bayway refineries in New Jersey remained shut. Power has been restored to Phillips’s 238,000 barrel-a-day Bayway plant and partially restored at Hess’s 70,000 barrel-a-day site.
Colonial Pipeline Co., which operates 5,500 miles of pipeline connecting Gulf Coast refineries to the Northeast, is serving seven of the 24 terminals connected to its Linden, New Jersey, fuel tank farm, according to the company.
“Demand should improve now that Sandy’s behind us,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “You should see refineries boost operating rates to make up for the Sandy losses. The market sold off strongly last week, so it’s about time we have a bit of a rebound.”
Gasoline for December delivery rose 4.66 cents, or 1.8 percent, to settle at $2.6202 a gallon on the Nymex. The futures dropped 4.6 percent last week.
Retail gasoline averaged $4.066 a gallon in New York City yesterday, up 2.6 cents from Nov. 3 and 9.4 cents from a week earlier, according to AAA, the largest U.S. motoring organization. Nationwide, retail prices averaged $3.47 yesterday, down from $3.543 a week earlier and the lowest since July 21.
Oil prices also advanced as 12 of 16 North Sea Forties crude cargoes for loading in October and November were postponed further, according to four people with knowledge of the loading program.
Forties is the most abundant of the four North Sea crude grades that make up the Dated Brent benchmark and, as the cheapest of the four, typically sets the marker used to price more than half of the world’s oil.
Loading programs are monthly schedules of crude shipments compiled by field operators to allow buyers and sellers to plan their supply and trading activities.
“Brent is helping WTI,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “How much further is oil going to fall? We are getting into some buying after the big drop.”
Oil also advanced as the Standard & Poor’s 500 Index erased losses. The index was up 0.1 percent after falling as much as 0.4 percent before voters decide between giving President Barack Obama another four years in office or changing course with Republican challenger Mitt Romney. The election is tomorrow.
“The general perception is that Romney is more pro- economy,” Cooper said. “In general, the market will probably rally on Romney victory and will sell off on an Obama victory.”
Obama led Romney 48 percent to 45 percent in an Oct. 31- Nov. 3 national poll conducted by the Pew Research Center, a survey that was deadlocked at 47 percent each a week ago.
U.S. oil production has jumped 36 percent since January 2009. Output rose to 6.67 million barrels a day in the week ended Oct. 26, the most since 1995.
“Look at how much production has gained in the past four years and that’s showing that there is a greater trend above and beyond politics,” said Jacob Correll, a Louisville, Kentucky- based analyst at Summit Energy Inc., which manages more than $20 billion in companies’ annual energy spending. “Production is going to continue to grow whoever is elected.”
Hedge-fund managers and other large speculators reduced their net-long positions in crude to the lowest in almost five months in the week ended Oct. 30, according to the Commodity Futures Trading Commission.
Electronic trading volume on the Nymex was 396,644 contracts as of 3:12 p.m. Volume totaled 648,226 contracts on Nov. 2, 24 percent above the three-month average. Open interest was 1.61 million.
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