Oil Rises as Storm Sandy Fades and Refineries Restart
Oil rose for a second day as refineries resumed operations after Hurricane Sandy dissipated, increasing demand for crude.
Futures climbed 0.7 percent as Philadelphia Energy Solutions’ 355,000-barrel-a-day Pennsylvania refinery restored operations. PBF Energy Inc. said its Paulsboro, New Jersey, and Delaware City, Delaware, refineries were running normally. Oil pared gains as U.S. stocks fell and the American Petroleum Institute said inventories rose for an eighth week.
“Some refineries are already back and running, which will absorb some of the crude, and that’s bullish for crude,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “For all the damage from the hurricane, people are expecting a fairly quick recovery.”
Crude oil for December delivery increased 56 cents to settle at $86.24 a barrel on the New York Mercantile Exchange. Futures, which are down 13 percent this year, fell 6.5 percent in October.
Floor trading on the Nymex resumed today after being suspended for two days because of the storm, CME Group Inc. (CME), the exchange’s owner, said in an e-mail. Electronic trading has operated normally.
Brent oil for December settlement slid 38 cents to $108.70 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to the West Texas Intermediate contract traded in New York narrowed for a second day, to $22.46 a barrel from $23.40.
Philadelphia Energy’s Pennsylvania refinery is running at a reduced rate until waterborne deliveries resume, the company said in an e-mailed statement today.
PBF said its 185,000-barrel-a-day Paulsboro refinery and 182,200-barrel-a-day Delaware City plant were operating normally today after storm disruptions. NuStar Energy LP (NS)’s 74,000-barrel- a-day plant in Paulsboro, New Jersey, will be at full production tomorrow, the company said.
“Refineries are going back on and it looks like there is no lasting damage,” said Bill Baruch, senior market strategist at Iitrader.com in Chicago. “There is technical resistance at $86.50.”
Seven refineries with a total capacity of 1.29 million barrels a day shut or reduced operations because of Sandy. Production starts at Phillips 66 (PSX)’s 238,000-barrel-a-day Bayway refinery in Linden and Hess Corp. (HES)’s 70,000-barrel-a-day Port Reading plant depend on post-storm assessments, the companies said.
Sandy’s remnants were scattered across the lower Great Lakes, according to an 11 a.m. advisory issued by the Hydrometeorological Prediction Center in College Park, Maryland.
“Sandy is fading as a factor in crude market trading,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The price is reflecting what’s taking place in other markets today.”
Gasoline for November delivery rose 3.3 cents, or 1.2 percent, to $2.7618 a gallon in New York. The contract expires today. The more-active December futures rose 1.48 cents, or 0.6 percent, to $2.6303.
“Gasoline supplies are very tight and the market reflects that,” Armstrong said.
Oil pared gains as the Standard & Poor’s 500 Index fell as much as 0.4 percent after rising as much as 0.5 percent.
U.S. crude stockpiles rose by 2.12 million barrels to 371.7 million last week, the American Petroleum Institute said yesterday. Gasoline supplies slipped 173,000 barrels to 199.2 million, the report showed.
“We had a slightly bearish API report and we’ll see what happens with the DOE,” Lynch said.
The government may report that crude supplies increased by 1.88 million barrels last week, according to the median of 10 responses in a Bloomberg survey of analysts. Gasoline stockpiles rose 175,000 barrels and distillate inventories declined by 1.2 million in the survey.
Electronic trading volume on the Nymex was 363,864 contracts as of 2:51 p.m. Volume totaled 223,552 contracts yesterday, the lowest level this year and 57 percent below the three-month average. Open interest was 1.6 million.
To contact the editor responsible for this story: Dan Stets at email@example.com