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Bloomberg: Oil Is Little Changed After Rising on U.S. Supply Drop Forecast

By Christian Schmollinger and Nesa Subrahmaniyan

Nov. 15 (Bloomberg) — Crude oil was little changed in New York after rising 3.2 percent yesterday on forecasts that an Energy Department report today will show U.S. supplies declined.

Stockpiles may fall for a fourth week to their lowest level in a year, according to the responses by 17 analysts surveyed by Bloomberg. Royal Dutch Shell Plc, Europe’s biggest oil company, has shut production at its Ursa deepwater platform in the Gulf of Mexico several days ago and expects to restart this week, spokeswoman Darci Sinclair said in an e-mail yesterday.

“Supply is slowly growing but so far not as fast as demand, so that has eaten into the inventories,” said Victor Shum, senior principal at consultant Purvin & Gertz Inc. in Singapore. “These days it’s not odd to see volatility of $2 or $3 a day.

Crude oil for December delivery was 1 cent lower at $94.08 a barrel at 12:56 p.m. Singapore time. Yesterday, it rose as much as $3.20, or 3.5 percent, to $94.16 a barrel before closing at $94.09 on the New York Mercantile Exchange.

Prices dropped 5.3 percent in the past two days on speculation slower economic growth will curb fuel demand. Futures climbed to $98.62 on Nov. 7, the highest intraday price since trading began in 1983. Prices are up 60 percent from a year ago.

“The market’s refocusing on the supply side and that will be the key driver today,” said Gerard Burg, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “There are still some risks on the supply side and that’s been a key factor in driving prices higher recently.”

Brent crude oil for December settlement was down 6 cents at $91.30 a barrel on the London-based ICE Futures Europe exchange at 1:04 p.m. Singapore time. It rose $2.53, or 2.9 percent, to close at $91.36. Brent reached $95.19 on Nov. 7, the highest since trading began in 1988.

Gasoline, Distillates

Inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, also dropped, according to the Bloomberg survey. Refineries probably operated at 86.7 percent of capacity, up 0.5 percentage point from the week before, the survey found.

The department is scheduled to release its weekly report on inventories today at 10:30 a.m. in Washington, a day later than usual because of the Veteran’s Day holiday on Nov. 12.

Petroleos Mexicanos, the state-owned oil monopoly, said it extinguished a fire at an offshore platform in the Gulf of Mexico that had been leaking oil and gas since an Oct. 23 accident that killed at least 21 workers. Mexico is the second- biggest supplier of crude oil to the U.S. in August, according to U.S. Energy Department data.

Fire Doused

The fire at the Kab 101 well was put out at 12:50 p.m. New York time yesterday, the Mexico City-based company said in a statement. Pemex, as the company is known, plans to seal the well with cement. It produced an average 5,800 barrels a day before the accident. No one was hurt in the fire, Pemex said.

Pemex pumps about 3.1 million barrels a day, and about 82 percent of its output comes from offshore fields in the Gulf of Mexico, the company says.

Shell halted output at its Ursa platform for scheduled work several days ago and decided to perform additional repairs on the platform’s flare boom that had originally been scheduled for early next year, Sinclair said, without giving information on production figures or when it was shut and when it may restart.

Shell operates the Ursa platform and has a 45 percent stake. BP Plc has a 23 percent holding and ConocoPhillips and Exxon Mobil Corp. each holds 16 percent, according to Shell’s Web site.

Crude oil also rose yesterday because the dollar fell against the euro for a second day on speculation economic growth in Europe will outpace the U.S. Oil and the dollar usually move in the opposite direction because a falling U.S. currency bolsters the appeal of commodities as an investment.

The dollar slid to a record $1.4752 versus the euro last week. It traded at $1.4644 against the euro at 8:23 a.m. in Singapore.

Dollar Drop

The Organization of Petroleum Exporting Countries, which produces more than 40 percent of the world’s oil, has no plans to price oil in any currency other than dollars, after the U.S. currency’s drop.

OPEC won’t use oil as a “political weapon,” OPEC Secretary General Abdalla Salem el-Badri told a news conference yesterday in Riyadh, Saudi Arabia, where the group will hold a heads-of-state summit from Nov. 17 to Nov. 18.

El-Badri also said OPEC ministers will discuss production quotas at their Dec. 5 meeting in Abu Dhabi. “Frankly, at this time,” there is “no need” for more oil, he said.

Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said yesterday in Riyadh the oil market is well supplied, and even if crude inventories decline, they are still “very comfortable.”

“The IEA forecast was lower demand,” al-Attiyah said, referring to the International Energy Agency’s projections for fourth quarter world oil demand.

The Paris-based IEA on Nov. 13 reduced its estimate for fourth-quarter world demand by 500,000 barrels a day, the third time it has cut the forecast since August. It cited expectations that higher gasoline prices and slower economic growth in the U.S. will restrain demand.

To contact the reporter on this story: Christian Schmollinger in Singapore at [email protected] ; Nesa Subrahmaniyan in Singapore at [email protected] .

Last Updated: November 15, 2007 00:23 EST and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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