Crude Oil Gains on Gulf Coast Shipping Concerns

Oil jumped nearly a dollar Tuesday as dealers anticipated shipping delays along the
U.S. Gulf Coast since last week would slice into commercial
crude stockpiles in the world's largest energy consumer.
    The U.S. Department of Energy will release its weekly
inventory report Wednesday morning, with analysts predicting it
will show a 2 million barrel decline in crude oil stocks.
    U.S. crude settled up 94 cents to $63.15 a barrel,
after rising as high as $63.45. London Brent was up 68
cents to $62.81.
    Dense fog forced the closure of the Houston Ship Channel
for the sixth consecutive day Tuesday, creating a large
backlog of tankers and other ships waiting to enter the United
States' biggest oil and petrochemicals port.
    "There is probably a little anxiety over the DOE numbers
because of the fog affecting tankers," said Tim Evans, energy
analyst for futures research at Citigroup Global Markets.
    The weather delays are not unusual on the Gulf Coast this
time of the year, but they come as producer group OPEC enacts a
1.2 million barrel per day production cut and prepares to
deepen it another 500,000 bpd from February.
    Analysts say compliance with the first cut, made in
reaction to a roughly 25 percent slide in prices from peaks
over $78 this summer, has been incomplete, but U.S. inventory
levels have begun to decline nonetheless.
    "Recent inventory patterns suggest that markets would have
moved into balance without OPEC help," said ABN AMRO analyst
Geoff Pyne.
    U.S. oil inventories are running about 4 percent higher
than a year ago, according to the latest government data.
    Limiting oil's gains, mild weather was expected to persist
in most of the United States until at least early January,
continuing a prolonged spell of balmy conditions that has
eroded heating oil demand.
    "The weather is mild in the United States and there is less
focus on geopolitical tension," John Hall of John Hall
Associates said. "I think prices are going to stick around
$60-$65 until something goes wrong."

U.S. crude oil futures bounced to the upside as traders worry the fogged-in Gulf Coast's shipping delays may show up Wednesday in supply reports showing slumping inventories.

"There was some limit on how far down we can tamp prices based on warmer-than-normal and there is probably a little anxiety over the (Department of Energy) numbers because of the fog affecting tankers," said Tim Evans, energy analyst for futures research at Citigroup Global Markets.

Evans was referencing above normal temperatures in key heating fuel areas in the United States and their pressure Monday and early Tuesday on heating oil and crude futures.

He added that last week's fog came after the data to Dec. 8 showed crude imports fell 701,000 barrels per day to 9.6 million bpd.

Today's $61.65 low was the weakest front-month price since Dec. 13, a day before OPEC decided on its most recent output cut, when crude fell to $60.74 before settling at $61.37.

The NYMEX January crude contract's expiration Tuesday was also an explanation for some price volatility, traders said.

In London, ICE February Brent crude also seesawed after slipping to $61.47.

The Houston Ship Channel was shut again on Tuesday morning, a sixth straight day of interruption, the Houston Pilots Association said. The channel was open during the night, allowing clearing of some of the backlog of ships.

Intermittent fog since last Thursday has created shipping delays from Corpus Christi, Texas, east to Lake Charles, Louisiana.

Mild weather in the key U.S. heating oil consuming Northeast should keep heating demand below normal over the next five days, with the six-to-10-day forecast for temperatures to be above normal, private forecaster DTN Meteorlogix said on Tuesday.

NYMEX January heating oil was down, but up from its $1.7015 low. The contract settled 6.10 cents weaker on Monday.

January RBOB rose, bouncing off a $1.6545 low.

Though crude oil and products supplies were lower in the week to Dec. 8, U.S. crude stocks remained 12.7 million barrels higher than the year-ago period, according to the most recent
government data.

The average of analyst forecasts polled by Reuters on Monday called for crude supplies to be lower last week, dropping 2 million barrels as the fog delayed offloading of both crude oil and refined products imports.

Distillate fuel inventories were expected to be 700,000 barrels, with gasoline supply unchanged and refinery use up 0.5 percentage point.

Monday's crude oil price drop of $1.22 followed Friday's 92-cent crude oil price jump after Thursday's OPEC deal to cut output 500,000 barrels per day from Feb. 1.

This second OPEC cut will be on top of a 1.2 million bpd cut that was implemented from Nov. 1.
    
TECHNICALS

NYMEX January crude resistance was charted at $64.00, above the Dec. 8 high of $63.65. Support was charted at $61.00.

Heating oil's resistance was charted at $1.78. Support gave way early at $1.71. The crack spread was at $9.34.

Gasoline resistance was slated at $1.70. Support was at $1.60. The crack spread was at $7.85.

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