Oil Prices Rise Ahead of Heating Oil Data
{{#rendered}} {{/rendered}}Oil prices vaulted back above $50 a barrel on Tuesday as traders took out insurance ahead of weekly U.S. data on Wednesday that is expected to show only a modest increase in lowly heating oil inventories.
U.S. light crude (search) hit a $50.25 high and was trading up 30 cents at $48.94 a barrel. Prices had eased early last week to two-month of $45.25.
In the Netherlands a fire at the BP Nerefco refinery, Europe's second largest, delayed the return from maintenance of processing units, supporting price gains.
{{#rendered}} {{/rendered}}London Brent rose $1.37 to $45.75 a barrel and London gas oil, the benchmark for European heating oil, rose $13.25 to $449 a tonne.
"There is a stay of execution while the weather does not go cold, but I still think that distillates are a problem in the longer term," said Geoff Pyne, analyst for Sempra Energy.
Traders who are short of heating oil futures contracts fear a repeat of the past two weeks when U.S. distillates inventories, including heating oil and diesel, failed to build as expected.
{{#rendered}} {{/rendered}}After 9 weeks of distillate stockdraws, heating oil stocks in the United States are 15 percent below year-ago levels.
Energy Information Administration (search) (EIA) data, due for release on Wednesday at 1530 GMT for the week to Nov. 19, is expected to show a small 400,000-barrel rise in distillates, a Reuters poll found.
The National Weather Service (search) said on Monday U.S. home heating needs were 22 percent below normal last week and predicted continued mild conditions this week.
{{#rendered}} {{/rendered}}But several forecasters are predicting a colder-than-normal winter to come in the United States Northeast, where heating oil is the main winter fuel.
Temperatures will remain warmer than normal in the region in December and cooler than normal in January and February, WSI said in its revised winter outlook. The Northeast is home to nearly 80 percent of U.S. heating oil consumers.
Meteorologists at the National Oceanic and Atmospheric Administration (search) said last week that the U.S. East, including the Northeast, should get cooler-than-average temperatures.
{{#rendered}} {{/rendered}}Oil also has found support from a disruption in Iraqi crude exports from Iraq's main southern producing region, the first serious loss in supplies from the south since late August.
"Iraq seems to be having difficulties again and that could prevent OPEC (search) from cutting back at its December meeting," said Adam Sieminski of Deutsche Bank.
Iraq's southern oil exports were running at a reduced rate of 1.1 million barrels per day following the accidental pipeline blast on Monday, a shipping source in the Gulf said.
{{#rendered}} {{/rendered}}OPEC meets on December 10 in Cairo to review output policy and is expected by traders to keep official output limits unchanged.
A fall from October's record $55.67 for U.S. crude has prompted some discussion in the cartel about a potential clamp-down on leakage above official quotas.
High crude prices are expected to trim global oil demand growth levels for next year and OPEC is predicting a rare winter build in stockpiles, if it keeps producing at current levels.
{{#rendered}} {{/rendered}}Excluding Iraq, which has no quota, OPEC pumped about 27.9 million bpd in October, 900,000 bpd over official limits that took effect Nov 1.