The prices of New York oil futures and those in London spread further apart this week as the EIA reported another large increase in US crude stocks, and Libya announced that its oil production was down to 250,000 b/d. NY oil closed Wednesday at 96.77, and London at $109.86, widening the Brent/WTI spread to $13.09. While refining across the US picked up last week, along the Gulf Coast it dropped to the lowest level since mid-March. This lowered the demand for oil from Cushing, Okla. which feeds most of its crude to Gulf Coast refineries. Stocks at Cushing jumped last week by 2.2 million barrels, the largest one-week rise in nearly a year.

US gasoline and distillate stocks fell by 1.7 million barrels and 3.1 million barrels respectively, considerably more than analysts had been expecting. This suggests that large amounts of gasoline and distillates are still being exported, likely to make up for the drop in Libyan production and European refining. US crude production fell by 43,000 b/d to 78.5 million. As winter approaches, production from North Dakota is likely to slow as it has in past years.

The Federal Reserve announced that as the economy is not showing signs of much of a rebound, it will continue buying $85 billion worth of bonds a month in hopes of stimulating activity. These purchases are supportive of oil prices.

Libya’s 350,000 b/d Sharara field has been closed by protestors making various demands on the central government. Production is now on the order of 250,000 b/d, down from 600,000 b/d during the last few weeks and over 1 million before the recent troubles started.

Natural gas futures continued falling this week on forecasts of warmer weather during November. Prices are now around $3.63, down nearly 40 cents per million since mid-October.

Tehran seems confident that an agreement on its nuclear programs will be reached soon and the sanctions lifted. The government has begun to offer more lucrative contracts to foreign oil companies who would be willing in invest in increasing Iranian production. It is also putting out feelers to its best customers asking how much oil they could use after the sanctions are lifted.

As Sunni extremist bombings of Shiite civilians continue, Shiite leaders are talking about taking up arms in self defense. The trouble, of course, is that Iraq’s security forces are already controlled by Shiites and so far are showing no signs that they can cope with the Sunni attacks. The only course left to the Shiites would seem to be widespread retaliatory attacks against Sunni civilians.

The Russia-Ukraine gas war which dominated the news a few years back seems on the verge of starting up again. Gazprom, Russia’s gas monopoly, is threatening to cut off the Ukrainians unless they pay up on their overdue bills immediately.

An unusual fall storm with hurricane force winds tore up southern Britain earlier this week and has made its way on to the Continent.

The Japanese government is becoming increasingly desperate over the lack of progress in bringing the situation at the Fukushima nuclear plant under control. Tokyo is talking about taking control of the clean-up, which is supposed to take another 40 years, away from the plant’s owner, Tokyo Electric Power, and give control of the site to an independent body.

The World Energy Congress meeting in Korea issued a statement saying that peak oil will not be a problem for another 40 years, as world reserves and production continue to increase.