Heating Oil Gains on Speculation Distillate Supplies Fell

Heating oil futures rose to the highest level in more than three weeks on speculation that supplies fell last week and higher prices for gasoil in Europe will attract more exports of diesel from the U.S.

Futures gained as the Energy Department is likely to report tomorrow that U.S. distillate inventories fell 1 million barrels last week, according to the median estimate of 11 analysts in a survey by Bloomberg. Gasoil jumped to a six-month high in London.

“Europe continues to draw diesel supplies from the U.S., especially right now when there’s a lot of European refineries undergoing maintenance,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

November-delivery heating oil advanced 0.99 cent, or 0.3 percent, to settle at $3.2131 a gallon on the New York Mercantile Exchange.

Futures jumped back above $3.22 in electronic trading after the American Petroleum Institute reported at 4:30 p.m. in New York a 6.2 million-barrel inventory drop. The Energy Department will release its report at 11 a.m. tomorrow.

Gasoline was little changed on speculation that refinery shutdowns and delayed restarts will reduce inventory levels even as demand declines seasonally.

Futures rose as Chevron Corp. said yesterday that a fire-damaged crude unit at its 240,000-barrel-a-day Richmond, California, refinery won’t restart this year. On the East Coast, Delta Air Lines Inc.’s Monroe Energy LLC subsidiary won’t restart the fluid catalytic cracker at its Trainer, Pennsylvania, refinery until next week, a person with direct knowledge of the refinery’s operations said yesterday.

Refinery Issues

“There may be an underlying sense that our aging refinery fleet is having issues,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline for November delivery rose 0.06 cent to $2.9593 a gallon on the exchange, the highest settlement since Sept. 28.

East Coast stockpiles sank to near four-year lows as of Sept. 28, according to data from the Energy Department.

The Energy Department is scheduled to report last week’s inventories tomorrow, a day later than usual because federal offices were closed for the Columbus Day holiday on Oct. 8. The department will probably report that gasoline inventories rose 250,000 barrels last week, according to the survey.

Gasoline shipments to the U.S. are poised to decline as European refineries continue maintenance, according to a Bloomberg survey. Sixteen tankers were booked for the voyage for the two weeks to Oct. 24, the median estimate of seven shipbrokers and traders who specialize in transporting the fuel. That’s three fewer than last week.

Regular gasoline at the pump, averaged nationwide, fell 0.2 cent to $3.813 yesterday, according to AAA, the nation’s largest motoring organization. The average retail price in California fell 0.5 cent to $4.666 from a yesterday’s record of $4.671 a gallon, AAA reported. It was the first drop in the state in 12 days.

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