GO
Loading...

UPDATE 5-Oil prices ease ahead of EIA data

Julia Payne
Thursday, 1 Nov 2012 | 2:59 PM ET

* Super storm Sandy seen impacting fuel demand on US East Coast

* Two New Jersey refineries slow to restart on power, flooding problems

* Buzzard could restart on today

* Coming up: EIA weekly petroleum stocks and output data

(Updates prices, adds comment on Buzzard, NY Harbor and quote)

LONDON, Nov 1 (Reuters) - Brent crude oil futures fell to around $108.40 a barrel on Thursday as investors assessed the aftermath of super storm Sandy.

The destruction wrought by the storm affected millions of people across the eastern United States and could dampen fuel demand just as the world's largest economy was showing signs of recovery, analysts said.

The pace of growth in the U.S. manufacturing sector picked up modestly in October as new orders improved, though a measure of employment slowed. The Institute for Supply Management (ISM) said its index of national factory activity rose to 51.7 from 51.5 in September, topping expectations.

``Many refineries are still out or with low runs so a build in crude oil inventories is expected next week and a draw on diesel, heating oil with gasoline moving sideways because no cars are moving,'' said Michael Poulsen, oil analyst at Global Risk Management in Copenhagen.

Brent crude for December delivery fell 36 cents to $108.34 a barrel by 1446 GMT. The front-month contract slipped for a second straight month in October on ample crude supply and worries about lower fuel demand as the global economy slows.

U.S. crude for December delivery was at $86.49 a barrel, up 25 cents.

Investors also kept to the sidelines on an uncertain political outlook in the world's two largest oil consumers this month as Americans head to the polls for the presidential elections next week and China's leaders meet to fill top posts.

Oil prices could continue trading sideways ahead of the U.S. elections just six days away, analysts said.

Brent crude remained underpinned by worries over upcoming North Sea loading programmes, owing to prolonged maintenance at the Buzzard Field, the main source for the Forties stream.

The oilfield could begin to restart later on Thursday, a trade source said.

``The North Sea remains very vulnerable to production problems,'' said Christopher Bellew, an oil broker at Jefferies Bache in London.

East Coast fuel supplies seemed set to remain tight into next week, as spotty electrical power and flooding damage stymied the recovery of two New Jersey refineries after Hurricane Sandy.

Phillips 66 confirmed it had restored power to its 238,000-barrel-per-day Bayway refinery in New Jersey, but officials gave no damage assessment or timeline for resuming output. Sources expect the plant to restart operations next week at the earliest.

Investors will scour weekly oil inventory statistics from the Energy Information Administration later on Thursday after industry data showed a rise of 2.1 million barrels in crude stockpiles last week.

U.S. oil demand in August was slightly stronger than previously estimated, but still down nearly 1 percent from a year ago, the U.S. government said Wednesday. Demand fell to 19.226 million barrels per day from last year.

U.S. gasoline futures, RBOB, for December rose 1.04 percent to $2.6575 a gallon after strong gains on Wednesday as spotty electrical power and damage by flooding stymied the recovery of two New Jersey refineries.

``As highways are reopened, etc, a scramble for gasoline supply at the retail level appears to be supporting RBOB values much more than is the case in the heating oil where residential tanks have already been filled,'' wrote Jim Ritterbusch, President, Ritterbusch & Associates, in a research note.

New York Harbor was expecting to be able to allow barges to dock but less likely larger tankers.

(Reporting by Julia Payne in London, Florence Tan in Singapore; editing by William Hardy and Jason Neely)