BLBG: Oil Rises as U.S. Stockpiles Drop for First Time in 10 Weeks
By Mark Shenk
Dec. 3 (Bloomberg) -- Crude oil rose after a government report showed that U.S. inventories declined for the first time in 10 weeks as refinery operating rates and imports tumbled.
Supplies fell 456,000 barrels to 320.4 million barrels last week, the Energy Department said today in a weekly report. Inventories were forecast to climb 1 million barrels, according to a Bloomberg News survey. Refineries unexpectedly cut operating rates, and imports dropped 13 percent, the report showed.
“Refineries are taking measures to reduce crude stocks because demand still looks weak,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “They are cutting back on throughput and slashing deliveries to keep stocks from accumulating.”
Crude oil for January delivery rose 58 cents, or 1.2 percent, to $47.54 a barrel at 12:01 p.m. on the New York Mercantile Exchange. Futures touched $46.26, the lowest since May 20, 2005. Oil prices have tumbled 68 percent since reaching a record $147.27 on July 11.
The department released its weekly report today at 10:35 a.m. in Washington.
Refineries operated at 84.3 percent of capacity, down 1.8 percentage points from the week before. It was the biggest one- week drop since September, when hurricanes Gustav and Ike struck the Gulf Coast. A 0.4 percentage-point increase was forecast.
Consumption averaged 19.6 million barrels a day last week, up 0.6 percent from the week before and down 5.7 percent from a year earlier, according to the report. Gasoline demand rose as consumption of distillate fuel, a category including diesel and heating oil, dropped, the report showed.
‘Disquieting’ Reduction
“The drop in refinery runs is pretty disquieting,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “Although there was a modest increase in gasoline demand, there was a drop in distillate demand. Distillate has been the star of the show, the only thing keeping the refinery doors open.”
Prices also rose because Qatar’s oil minister said OPEC will “definitely” cut output at its next meeting in Algeria on Dec. 17, after postponing a decision last month. The Organization of Petroleum Exporting Countries supplies more than 40 percent of the world’s oil.
Abdullah bin Hamad al-Attiyah said he doesn’t know by how much the group will reduce production. The group wants oil prices at between $70 and $80 a barrel “because this is the range at which you can invest,” al-Attiyah said at a conference in Dubai today. “$70 is the minimum price at which we can invest.”
Nigerian Exports
Eni SpA, Italy’s largest oil company, suspended obligations on some Nigerian oil exports following a pipeline disruption, the company said today.
Eni has declared “force majeure” on Brass River crude exports, according a Rome-based company official who declined to be identified. Force majeure is a legal clause that allows producers to miss contracted deliveries because of circumstances beyond their control.
Eni’s share of lost production is between 15,000 and 18,000 barrels a day, according to the official, who could not specify how much other companies’ output has been reduced.
Brent crude oil for January settlement rose 65 cents, or 1.4 percent, to $46.09 a barrel on London’s ICE Futures Europe exchange. Futures touched $44.87, the lowest since Feb. 14, 2005.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
