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Bloomberg: Crude Oil Rises on Concern Disruptions May Cut U.S. Stockpiles

By Christian Schmollinger and Gavin Evans

Nov. 9 (Bloomberg) — Crude oil rose for the first time in three days in New York on concern supply disruptions may hamper U.S. efforts to store fuel for peak winter demand.

A fire at Valero Energy Corp.’s refinery in Port Arthur, Texas, the company’s largest, left processing rates “somewhat reduced,” a company spokesman said. Strong currents in the Gulf of Mexico are delaying the restart of the 150,000 barrel-a-day Mars platform shut for maintenance since Nov. 3, Royal Dutch Shell Plc said yesterday.

“The supply situation seems serious so people are seeing this as a buying opportunity,” said Tetsu Emori, fund manager with Astmax Futures Ltd. in Tokyo. “For the bullish players it’s a good time to take a fresh long position.”

Crude oil for December delivery rose as much as $1.02, or 1.1 percent, to $96.48 in after-hours electronic trading on the New York Mercantile Exchange. It was at $96.20 at 2:27 p.m. Singapore time.

The contract fell 91 cents, or 0.9 percent, to $95.46 yesterday after Federal Reserve Chairman Ben S. Bernanke told a congressional committee the U.S. economy, the world’s biggest oil user, is likely to “slow noticeably” this quarter. Futures slid from a record $98.62 the day before after U.S. equities declined to an eight-week low.

U.S. oil stockpiles fell to 311.9 million barrels last week, the third straight decline, even as imports rose and refining stalled at a seven-month low, the Energy Department said Nov. 2.

`Very Concerned’

“The market is still very concerned about the drawdown in the inventories,” said Tom Hartmann, commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. “It’s just going to be an ongoing concern that if we get any kind of supply disruption, we’re not going to be able to meet demand.”

Brent crude oil for December settlement rose as much as 68 cents, or 0.7 percent, to $93.47 a barrel on the London-based ICE Futures Europe exchange. It was at $93.42 at 1:51 p.m. Singapore time. It reached $95.19 on Nov. 7, the highest since trading began in 1988.

At the Valero refinery, the blaze broke out at 7 a.m. local time, in a heater at a distillate hydrotreating unit, Bill Day, a company spokesman, said in an e-mail. The fire was “quickly” contained, Day said. The refinery is capable of processing 325,000 barrels of oil a day, according to Valero.

The unit affected by the fire, one of two distillate hydrotreaters at the plant, was shut, Day said.

“Most process units are in operation,” he said.

Valero Refinery

The refinery is operating at 60 percent of capacity because of the fire, the Beaumont Enterprise reported, without saying where it got the information. Day didn’t comment on the newspaper report. He said the plant was operating at “somewhat reduced” processing rates before the fire because of problems transporting petroleum coke to the port.

New York futures have gained 20 percent the past month, driven primarily by the sliding U.S. dollar that pushed investors toward physical assets including oil and gold, Altavest’s Hartmann said.

While investors are reluctant to buy at current prices, U.S. equity markets aren’t likely to drop enough near-term to prevent them buying oil in any dips, he said.

Heating oil prices in New York surged to a record yesterday on concern that supplies may be inadequate before the peak demand period during the northern hemisphere winter.

Heating oil for December delivery rose as much as 1.51 cents, or 0.6 percent, to $2.6209 a gallon on the New York Mercantile Exchange. The contract was at $2.6196 a gallon at 1:01 p.m. Singapore time. It rose to as much as $2.66 yesterday, the highest since 1978.

“It’s about perceptions and how much of cushion is there in oil markets as far as products are concerned,” said Gavin Wendt, a senior resources analyst at Fat Prophets in Sydney. “There are concerns about whether there will be enough physical supplies over the next few months, from late December to February.”

To contact the reporters on this story: Christian Schmollinger in Singapore at [email protected] ; Gavin Evans in Wellington at [email protected]

Last Updated: November 9, 2007 01:35 EST

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