U.S. oil supplies probably fell for the first time in three weeks on increased demand from refiners as they boosted production, a Bloomberg News survey showed.
Inventories dropped 1.4 million barrels, or 0.4 percent, in the seven days ended Dec. 3 from 359.7 million a week earlier, according to the median of 16 analyst estimates before an Energy Department report tomorrow. Fourteen of the respondents forecast a decrease and two projected a gain.
The crack spread, or profit from processing three barrels of oil into two of gasoline and one of heating oil, jumped 23 percent last week. Exxon Mobil Corp. and Valero Energy Corp. started units last week after completing repairs. Companies shut plants for maintenance in autumn when gasoline use falls and winter heating-oil demand has yet to increase.
“We can expect crude oil supplies to drop because some refineries are coming out of maintenance,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund focusing on energy. “There’s been tightness of supply in New York Harbor so they have every incentive to ramp up output.”
Gasoline surged to $2.3699 a gallon yesterday on the New York Mercantile Exchange, the highest intraday level since May 4. The contract dropped 1.87 cents, or 0.8 percent, to settle at $2.323 today.
Inventories along the East Coast fell 1.8 percent in the week ended Nov. 26, the Energy Department reported last week. Irving Oil Corp. shut a unit at its Saint John refinery in New Brunswick, which supplies New York Harbor, the delivery point for the Nymex contract.
Refiners along the Gulf Coast also are lowering stockpiles to reduce their assets at the end of the year, said Tim Evans, an energy analyst at Citi Futures Perspective in New York. Inventories in the region, which holds almost half of U.S. refinery capacity, have dropped by an average 11.2 million barrels during the month of December over the past four years.
“Crude oil supplies tend to decline seasonably,” Evans said. “There’s a cash incentive for refiners to reduce crude-oil inventories along the Gulf Coast because they are taxed on year-end physical stocks.”
Oil for January delivery slipped 69 cents, or 0.8 percent, to settle at $88.69 a barrel on the Nymex. Futures climbed as much as $1.38, or 1.5 percent, to $90.76 a barrel, the highest intraday price in 26 months.
Refineries probably increased operating rates 1 percentage point to 83.6 percent last week, according to the survey.
Exxon Mobil said on Nov. 30 that units returned to service at its refinery in Torrance, California, and operations are “normal” after maintenance. The plant shut because of a power supply failure the previous week. The company said on Dec. 2 that it isolated a malfunction in one of the fuel gas treating units at its Baton Rouge, Louisiana, facility.
Valero started a unit at its Corpus Christi West refinery in Texas that had been closed for maintenance, Bill Day, a company spokesman, said in an e-mail on Dec. 1.
The crack spread ended last week at $11.492 a barrel. The margin was up 0.4 percent to $10.894 at 2:45 p.m. today, based on New York futures prices.
Refinery operating rates tumbled 2.9 percentage points in the week ended Nov. 26, the biggest decline since August, the Energy Department said last week.
“The big drop in refinery utilization may have been tied to Thanksgiving,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “We should see the resurgence of refinery utilization rates in this report, which should reduce crude-oil stocks and send prices higher.”
The U.S. Thanksgiving holiday occurred on Nov. 25. Crude oil stockpiles have dropped in two of the past three years during the week of the holiday.
“Crude supplies are expected to show a significant decrease as imports likely slipped further in follow-through from the previous week’s sizable decline,” Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consulting firm, said in a report.
Imports of crude oil shrank 6.4 percent to 8.45 million barrels a day in the week ended Nov. 26, the fourth decline in five weeks.
Gasoline stockpiles slipped 300,000 barrels, or 0.1 percent, from 210.2 million, the survey showed. Seventeen respondents gave product-supply estimates. Nine of the analysts projected a decline and eight forecast an increase.
Supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 900,000 barrels, or 0.6 percent, from 158.1 million, the survey showed. Ten of the analysts anticipated a slide, six projected an increase and one said there was no change.
The department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.