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Bloomberg: Crude Oil Rises From Eight-Week Low as Dean Disrupts Shipments

By Gavin Evans and Sophie Tan

Aug. 23 (Bloomberg) — Crude oil rose from an eight-week low in New York on signs disruption from Hurricane Dean and summer driving demand will reduce U.S. fuel supplies.

Gasoline gained after Royal Dutch Shell Plc cut output at its Deer Park, Texas, refinery because of potential delays in crude shipments after Dean. Gasoline jumped yesterday after an Energy Department report showed U.S. consumption increased to a record last week and stockpiles fell the most in four years.

“The stock data shows U.S. gasoline supply is struggling to meet buoyant demand amid reduced imports,” said Antoine Halff, head of energy research at Fimat USA Inc. in New York. “Reduced imports of Mexican crude in the coming weeks may not only result in U.S. crude stock draws, offsetting last week’s build, but may also spill over to product inventories.”

Crude oil for October delivery climbed as much as 45 cents, or 0.7 percent, to $69.71 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $69.36 at 2:53 p.m. in Singapore.

The contract fell 0.5 percent to $69.26 yesterday, its third straight decline and the lowest close since June 27, as the department’s report showed U.S. oil stockpiles unexpectedly rose for the first time in seven weeks after a surge in imports.

Summer “is not quite over yet” and there will be good support around $65, said Bob Frye, a commodity broker at Access Futures & Options Trading in Woodlake, California. “I just can’t see crude getting slaughtered here.”


Gasoline for September delivery rose 1.1 cents, or 0.6 percent, to $1.90 a gallon, after gaining 1.4 percent yesterday.

Shell’s 340,000 barrel-a-day Deer Park plant is part-owned by Petroleos Mexicanos, which evacuated almost 20,000 workers from its fields in the southern Gulf of Mexico as Dean advanced.

Mexico’s state-owned oil monopoly said it may be near the end of next week before full oil production is restored. Oil reserves are at about 10.5 million barrels and shipments will resume as soon as ports reopen, the company said yesterday.

Oil has dropped 12 percent from a record $78.77 on Aug. 1 as gasoline demand waned and on concern subprime mortgage losses in the U.S. may cut demand in the world’s biggest oil user.

The decline accelerated earlier in the week as forecasters shifted the likely track of Hurricane Dean away from U.S. oil and gas fields in the northern Gulf of Mexico.

Brent, Inventories

Brent crude oil for October settlement rose as much as 33 cents, or 0.5 percent, to $69.03 a barrel on the London-based ICE Futures exchange. It traded at $68.87 a barrel at 2:55 p.m. Singapore time. It gained 1 cent yesterday from an 11-week low of $68.69 a barrel the day before.

U.S. oil stockpiles added 1.89 million barrels to 337.1 million last week, 11.4 percent higher than the five-year average for the period, the department said yesterday.

Gasoline inventories fell 5.71 million barrels to 196.2 million last week, the report showed. It was the biggest one- week decline since August 2003, and left inventories 4.3 percent below the five-year average.

U.S. gasoline demand peaks June through August as summer holiday travel puts more cars on the roads. Implied demand rose last week for the first time in five weeks to average a record 9.76 million barrels a day, the department said.

Speculation of a bigger-than-seasonal easing in U.S. gasoline demand “have proved to be greatly exaggerated,” Barclays Capital analysts Paul Horsnell and Kevin Norrish said in a note to clients. Global and U.S. data suggests oil prices may poised to rise, they said.

“All that is now holding the advance back is the, in our view, inflated fear about the size of the subprime effects” on the global economy.”

Countrywide Financial Corp., the biggest U.S. mortgage lender, yesterday sold $2 billion of preferred stock to Bank of America Corp. to bolster its finances amid the nation’s worst housing slump since the Great Depression.

“This is scaring a lot of people and they are backing off,” Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California said.

To contact the reporters on this story: Gavin Evans in Wellington at [email protected] ; To contact the reporter on this story: Sophie Tan in Singapore at [email protected] .

Last Updated: August 23, 2007 02:56 EDT and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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