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Crude Futures Trade Near Four-Month Low Before U.S. Elections

Oil traded close to a four-month low in New York before presidential elections in the U.S., the world’s largest crude consumer, while fuel shipments resumed on the East Coast after Hurricane Sandy.

West Texas Intermediate futures were little changed as fifteen tankers, including two crude carriers, will arrive this week in New York Harbor, according to the U.S. Coast Guard. Phillips 66 said it will resume operations in two to three weeks at its Bayway refinery in New Jersey. U.S. voters decide today whether to return Barack Obama as president or elect his challenger Mitt Romney.

“Traders are obviously eyeing the presidential elections, and demand concerns are going to haunt crude prices for the time being,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who last month correctly predicted that Brent crude prices would slide.

West Texas Intermediate oil for December delivery was at $85.59 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchange at 8:57 a.m. London time. The contract traded at $84.34 yesterday, the lowest intraday level since July 12. Prices have dropped 13 percent this year.

Brent for December settlement was down 38 cents at $107.35 a barrel on the ICE Futures Europe exchange. The European benchmark crude was at a premium of $21.76 to New York-traded WTI after widening 6.1 percent yesterday.

Forties Deferrals

Brent’s premium to WTI has grown amid maintenance at the North Sea fields that underlie the Brent contract.

Fifteen of 16 Forties oil cargoes were deferred in October and at least 60 percent of consignments in November were delayed. That’s an unprecedented number of disruptions, according to a survey of five traders yesterday, three of whom have been involved in this crude market for more than 10 years.

Morgan Stanley increased its forecast for the Brent-WTI spread in the fourth quarter to about $20 a barrel from $17.50 previously because of the disruptions. The premium will average about $19 in November and December, the bank said in a report e-mailed today.

Nexen Inc. said yesterday that it restarted the 200,000 barrel-a-day North Sea Buzzard oil field, the biggest contributor to Forties blend, after two months of maintenance.

New York

Colonial Pipeline Co. began deliveries from its Linden, New Jersey, fuel tank farm to customers with operable terminals and is working with facilities that haven’t reopened to ensure service is restarted promptly, according to Steve Baker, a company spokesman.

Phillips 66 plans to resume operations at the 238,000 barrel-a-day Bayway plant, the largest single refinery on the U.S. East Coast, after repairing the electrical equipment that was primarily damaged by Sandy, the Houston-based company said on its website. Process units are “in good condition,” it said. The refinery was one of seven plants with a total capacity of 1.29 million barrels a day that halted production or cut rates because of Sandy.

U.S. fuel inventories probably fell last week after the storm shut the refineries and terminals, according to the median of nine analyst estimates in a Bloomberg survey before an Energy Department report this week.

Stockpiles of gasoline decreased by 1.5 million barrels to 198 million in the seven days ended Nov. 2, according to the median of nine analyst estimates. Supplies of distillate fuel, a category that includes diesel and heating oil, probably declined 1.25 million barrels to 116.7 million. A decrease of that size would leave inventories at the lowest level since June 2008.

Oil in New York has technical support along its lower Bollinger Band around $83.76 a barrel today, according to data compiled by Bloomberg. Futures rebounded after reaching this indicator the past two days, signaling buy orders may be clustered close to it.

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