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Oil, Gasoline Advance on Gain in U.S. Payrolls: Oil Products

Dec. 1 (Bloomberg) -- Oil, heating oil and gasoline gained at least 3 percent after U.S. companies boosted their payrolls the most in almost three years and Chinese manufacturing grew more than expected. Ethanol also rose.

“Today’s economic headlines point to stronger fuel demand in 2011 and higher prices,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “OPEC is not overwhelming the market and global stockpiles should fall.”

Crude Oil

Crude oil for January delivery jumped $2.64, or 3.1 percent, to $86.75 a barrel on the New York Mercantile Exchange. Oil last moved in the same direction two days in a row Nov. 17.

Goldman, Sachs & Co. predicted that oil will average $110 a barrel in 2012, up from a forecast $100 next year. The bank increased its forecast for U.S. gross domestic product growth next year to 2.7 percent from 2 percent and said the U.S. economy will expand 3.6 percent in 2012.

U.S. crude oil supplies climbed 1.07 million barrels to 359.7 million in the week ended Nov. 26, an Energy Department report showed today. Inventories were forecast to decrease by 1.15 million barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.

Gasoline

Gasoline for January delivery gained 11.36 cents, or 5.2 percent, to $2.3004 a gallon on the Nymex, the highest settlement price since May 4.

Stockpiles of the fuel grew 561,000 barrels, or 0.3 percent, to 210.2 million, the Energy Department reported. The median forecast of 17 analysts surveyed by Bloomberg News was for a 300,000-barrel gain.

Gasoline demand rose 0.4 percent to 8.87 million barrels a day. The four-week average fell 0.4 percent to 8.93 million.

The January gasoline crack spread gained $2.13 to $9.87 a barrel. The one-year average is $9.31.

Heating Oil

Heating oil for January delivery gained 8.12 cents, or 3.5 percent, to $2.4056 a gallon. Heating oil is traded as a proxy for diesel.

Stockpiles of distillates fell 194,000 barrels to 158.1 million, the 10th consecutive drop and the lowest level since June 18. Distillate demand slipped 3.6 percent to 3.67 million barrels a day.

The January heating oil crack spread increased 77 cents to $14.29 a barrel. The one-year average is $10.29.

Ethanol

Denatured ethanol for December delivery increased for the first day in three, adding 1.8 cents, or 0.9 percent, to $2.124 a gallon. Futures have dropped 1.6 percent in the past year.

Fifteen U.S. senators including Charles Grassley, a Republican from Iowa, and Kent Conrad, a Democrat from North Dakota, wrote a letter supporting government incentives for the ethanol industry to the Senate party leaders, a day after 17 other senators said they want to end the incentives.

In cash market trading, ethanol dropped 0.5 cent in New York to $2.24 a gallon, 1.5 cents in Chicago to $2.14, 1 cent on the Gulf Coast to $2.265, and was unchanged on the West Coast at $2.245.

Refineries and Transport

BP Plc reported a breakdown at its Carson, California, refinery that resulted in the flaring of gases, according to a filing with state regulators.

Irving Oil Corp. shut a residual fluidized catalytic cracker at its Saint John refinery in New Brunswick for maintenance, Lesley MacLeod, a company spokeswoman, said in an e-mail.

Valero Energy Corp.’s shutdown of a fluid catalytic cracker at its Memphis, Tennessee, refinery is expected to last several days, according to Bill Day, a company spokesman.

To contact the reporter on this story: Richard Stubbe in Dallas at rstubbe1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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