Nov. 23 (Bloomberg) — New York crude oil touched $50 a barrel for the first time in almost three weeks amid concern that refiners have failed to build adequate heating-oil supplies in time for the U.S. winter.
Belton, Missouri-based Weather Derivatives changed its estimate of U.S. heating demand over the next six-to-10-days to 10 percent above normal from yesterday’s 8 percent below. U.S. inventories of distillate fuels, which include diesel and heating oil, have fallen for nine straight weeks, according to government data.
“We’ve run out of time to ramp up heating-oil inventories,” said James Cordier, president of Liberty Trading Group, a St. Petersburg, Florida, futures broker. “We’re going to be living with high heating-oil prices through winter,” which will support crude-oil prices, he said.
Crude oil for January delivery rose $1.31, or 2.7 percent, to $49.95 a barrel as of 12:23 p.m. on the New York Mercantile Exchange. Earlier, the price touched $50.25 per barrel, the highest since Nov. 4. Futures have risen 8.3 percent in the last week. Prices were 58 percent higher than a year earlier.
Brent crude oil for January rose $1.14, or 2.6 percent, to $45.52 a barrel on London’s International Petroleum Exchange.
Below-normal temperatures will stretch as far east as the Great Lakes from Nov. 28 to Dec. 2, rather than stalling out in the Plains as expected yesterday, Earth Satellite Corp. said.
“People are beginning to believe the cold weather forecasts rather than the warm weather,” said Phil Flynn, vice-president of risk management with Alaron Trading Corp. in Chicago.
Heating Oil
Surging U.S. diesel demand has kept refiners from building heating oil inventories. Demand during the last four weeks averaged 8.1 percent more than the same period last year.
Distillate fuel stockpiles probably rose 200,000 barrels last week, according to the median forecast among 11 analysts surveyed by Bloomberg. That would leave supplies 11 percent lower than a year ago.
Distillate inventories were at 114.6 million barrels for the week ended Nov. 12, down 14.7 million barrels, or 11 percent, from the 5-year average, according to government figures.
U.S. heating-oil supplies rose 637,000 barrels, or 1.3 percent, to 49.08 million barrels for the week ended Nov. 12, down 16 percent from the 5-year average, according to the Energy Department.
`Nervous’ Market
Heating-oil stocks are supposed to rise this time of year, “before the real cold temperatures,” according to Rick Mueller, senior oil analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. “So far we’ve benefited from unseasonable warmth here, which has kept demand off. But that’s really what the market is nervous about.”
The U.S. Energy Department will issue its weekly oil- inventory report tomorrow at 10:30 a.m. Washington time. Oil prices rallied on Nov. 17 after the report showed an unexpected decline in distillate supplies.
Crude-oil stockpiles probably rose by 700,000 barrels, the ninth straight increase, and gasoline inventories probably climbed by 800,000 barrels, according to the median analyst forecast.
Above-normal temperatures have offset supply cuts from the Gulf of Mexico, where oil production has been trimmed by 31.1 million barrels since Sept. 11, when Hurricane Ivan toppled rigs and damaged pipelines in the region. Daily output from the Gulf was down 196,222 barrels as of yesterday, according to the U.S. Minerals Management Service.
Demand Rising
Demand for motor and jet fuels is also forecast to rise as the U.S. begins the Christmas holiday season with the Thanksgiving celebration Thursday.
“We could see the strongest travel demand since 2000,” Alaron’s Flynn said. “Supplies are still extremely tight and it isn’t going to get any better soon.”
Gasoline for December delivery at New York Harbor gained 3.11 cents to $1.3205 per gallon, the highest since Nov. 1, and heating oil rose 2.76 cents to $147.25 on the Nymex. Spot prices for New York Harbor jet fuel were up 2.14 cents to $1.4813 per gallon
Oil may also be getting a lift from disruption of Iraqi supplies. The country’s exports from the Persian Gulf were cut almost in half for a second day after an explosion at a southern pipeline hampered shipments from its largest terminal at Basra.
Iraq pumped 2.25 million barrels a day in October, the highest output in five months.
“Iraq is still a factor in this market,” said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant.
