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UPDATE 10-Oil surges 2 pct to top $91 on supply concerns
January 11, 2011 / 5:20 PM / 7 years ago

UPDATE 10-Oil surges 2 pct to top $91 on supply concerns

 * Statoil shuts two N. Sea fields, adds lift to oil prices
 * API: US crude stocks rose unexpectedly, gasoline jumped
 * Coming Up: US EIA oil inventory data, 1530 GMT Wednesday  (Updates trading volume in paragraph six, adds API inventory report in paragraphs 14-15)
 By Robert Gibbons
 NEW YORK, Jan 11 (Reuters) - U.S. oil prices jumped 2 percent to top $91 a barrel on Tuesday as the shutdown of two North Sea oilfields stoked supply concerns for markets already on edge from the closure of Alaska’s main crude pipeline.
 More support came from forecasts for stronger heating demand this week as the U.S. Northeast, the world’s biggest heating oil market, prepared for another snowstorm. [ID:nN1313] [ID:nSGE709069]
 Oil received an early boost after Norway’s Statoil (STL.OL) said it shut about 157,000 barrels per day (bpd) of crude production due to a gas leak at the offshore Snorre and Vigdis fields and did not know when they would restart. [ID:nLDE70A1XE]
 State and company officials sought to restart the Trans Alaska Pipeline System’s main oil pipeline. The pipeline closed on Saturday after a leak, forcing the shutdown of over 600,000 bpd of production, nearly 12 percent of U.S. oil output. [ID:nN11117795] [ID:nN11150408]
 U.S. crude oil for February delivery CLc1 rose $1.86 to settle at $91.11 a barrel, having reached $91.39. U.S. heating oil futures HOc1 rose 2 percent to their highest level since October 2008 on expectations colder weather will boost demand.
 U.S. crude futures trading volume totaled 926,998 lots at the end of post-settlement trade, well above the 250-day average of 618,458 lots, according to Reuters data, continuing a post-holiday volume rebound.
 In London, ICE Brent crude for February LCOc1 rose $1.91 to settle at $97.61 a barrel, having traded as high as $97.82.
 Oil also found support from news that Chevron (CVX.N) shut a Eugene Island crude oil platform in the Gulf of Mexico on Monday. The company later said the platform was offline for only an hour and had restarted production, easing concerns. [ID:nN11134231]
 BRENT/U.S. CRUDE SPREAD WIDENS
 The premium for London’s ICE Brent crude over the U.S. light sweet crude benchmark, West Texas Intermediate, jumped above $7 a barrel intraday, pushing the spread CL-LCO1=R to its widest since February 2009.
 The Statoil news added another factor to the mix that has kept Brent trading above U.S. crude since August last year, supported by a combination of dwindling North Sea crude supplies and disruption of oil grades priced off it.
 Traders said if the disruption to the Alaskan pipeline lingers, it could result in shifting crude supplies priced off Brent to the U.S. West Coast.
 “There is the possibility the pipeline will resume operations pretty soon, in fact three-five days from now, but if it doesn‘t, it will have a strong impact on the market,” said Christophe Barret, global oil analyst at Credit Agricole.
 “If the pipeline doesn’t restart, the need to find other sources will impact crude oil prices in the Middle East.”
 EYEING U.S. OIL INVENTORIES
 U.S. crude oil stockpiles managed a 57,000-barrel gain last week, according to data from industry group the American Petroleum Institute released late on Tuesday, in the face of expectations crude stocks had fallen. [API/S]
 Gasoline stocks rose by a whopping 7.0 million barrels and distillate stocks added 1.6 million barrels, the API report showed.
 The U.S. government’s Energy Information Administration will release its own data on inventories on Wednesday at 10:30 a.m. EST (1530 GMT).
 Ahead of the API data, an expanded Reuters survey of analysts on Tuesday forecast U.S. crude oil inventories probably fell 1.1 million barrels last week. [EIA/S]
 Distillate stocks, which include heating oil and diesel fuel, were seen up 1.0 million barrels, while gasoline stocks were expected to be up 1.8 million barrels, the survey showed.
 U.S. retail gasoline demand was little changed last week from the previous period but fell compared to year-ago levels, a MasterCard report said. [ID:nN11143805]  (Additional reporting by Gene Ramos in New York, Christopher Johnson and Jessica Donati in London and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy and Dale Hudson)   

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