Crude oil climbed the most in four weeks in New York as a weather system threatened to reduce U.S. production from the Gulf of Mexico, where shut-ins from last week’s storm probably curbed stockpiles.
Futures rose 3.9 percent as the disturbance in Mexico’s Bay of Campeche strengthened. The Energy Department may report that inventories fell 2 million barrels last week as Tropical Storm Lee shut output, according to a Bloomberg News survey. Oil also rose on speculation President Barack Obama will announce plans for more than $300 billion in measures to boost the economy.
“A new storm is building up strength, which is giving the market a boost,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “The API report tonight and the DOE report tomorrow will probably show a crude draw. There’s also optimism that President Obama will announce additional stimulus in his upcoming speech.”
Crude oil for October delivery rose $3.32 to settle at $89.34 a barrel on the New York Mercantile Exchange. It was the biggest gain since Aug. 10. Oil has gained 21 percent in the past year.
Prices climbed from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles decreased 2.97 million barrels to 349.2 million. October oil gained $3.54, or 4.1 percent, to $89.56 a barrel in electronic trading at 4:33 p.m.
Brent oil for October settlement advanced $2.91, or 2.6 percent, to end the session at $115.80 on the London-based ICE Futures Europe Exchange. The European benchmark contract was at premium of $26.46 to U.S. futures, compared with yesterday’s record $26.87 based on settlement prices.
The Energy Department will release its weekly stockpile data at 11 a.m. tomorrow in Washington. Both reports are a day late because of the Labor Day holiday on Sept. 5.
The report will show that gasoline supplies decreased 1.4 million barrels in the week ended Sept. 2, according to the median of 15 responses in the survey. Analysts were split over whether stockpiles of distillate fuel, a category that includes heating oil and diesel, slipped or increased last week.
Gasoline for October delivery rose 8.54 cents, or 3 percent, to settle at $2.908 a gallon in New York.
“The expectation that U.S. stock levels will be down due to shut-ins in the Gulf of Mexico and the missing barrels from Libya are keeping prices up,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “Oil is stronger than all the other markets around the world, so if there are signs the debt crisis cannot be overcome, I see a bigger downside for oil. But at the moment, oil is supported.”
The disturbance in the Bay of Campeche is showing “signs of organization” and may strengthen into a tropical cyclone in the next two days, the National Hurricane Center said at 11 a.m. New York time. The bay, where conditions are conducive for storms, holds rigs and platforms owned by Petroleos Mexicanos.
About 36.9 percent of U.S. oil production and 18.1 percent of natural gas output from the Gulf of Mexico has been halted after Tropical Storm Lee passed through the region, the Bureau of Ocean Energy Management, Regulation and Enforcement said today. The Gulf is home to 27 percent of U.S. oil output and 6.5 percent of the country’s natural gas production.
“We’re moving higher on short-term headlines,” said Stephen Schork, president of the Villanova, Pennsylvania-based Schork Group Inc.
Address to Congress
President Obama will address Congress tomorrow amid unemployment that remains at 9.1 percent more than two years after the recession’s official end. He plans to propose sparking job growth, mostly through tax cuts, infrastructure spending and direct aid to state and local governments.
The Standard & Poor’s 500 Index advanced 2.9 percent to 1,198.62 and the Dow Jones Industrial Average increased 2.5 percent to 11,414.86.
The dollar fell 0.7 percent to $1.4099 against the euro after Germany’s top court rejected constitutional challenges to the nation’s participation in the region’s rescue funds. A falling U.S. currency bolsters the appeal of dollar-denominated raw materials such as oil.
Libya may take at least 18 months to restore oil production to prewar levels because of delays in establishing political stability and the advanced age of the country’s oilfields, according to Bank of America Corp. The loss of the country’s barrels has reduced the availability of light, sweet crude oil, in Europe, which bolstered Brent prices.
Estimates by Libya’s National Transitional Council that output can be restored to about 600,000 barrels a day within weeks are “optimistic,” Francisco Blanch, Bank of America’s New York-based head of commodities research, said in an e-mailed report dated yesterday.
Libyan oil output slumped to 45,000 barrels a day in August from 1.59 million barrels in January, according to a Bloomberg News survey, after the revolt to end Muammar Qaddafi’s 42-year rule disrupted pumping.
Oil volume in electronic trading on the Nymex was 593,480 contracts as of 4:34 p.m. in New York. Volume totaled 547,932 contracts yesterday, 19 percent below the average of the past three months. Open interest was 1.52 million contracts.