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Updated Thursday, November 19, 2009 11:11 am TWN, Bloomberg

Oil rises for a third day as report shows stockpile drop

LONDON -- Oil advanced for a third day in New York, rising above US$80 a barrel after an industry report showed crude stockpiles declined in the U.S., the largest energy consumer. The American Petroleum Institute said Tuesday crude inventories fell by 4.37 million barrels last week to 333.1 million barrels. The U.S. Energy Department releases its weekly supply report Wednesday in Washington. Analysts expect it to say overall fuel supplies fell. Imports and output were disrupted last week as Hurricane Ida passed through the Gulf of Mexico.

“Oil prices are moving on surprisingly bullish data showing a higher-than-expected draw on crude stocks, indicating that demand is improving,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “It's probably explained by Ida, which caused refineries and transportation to be shut down.”

Crude oil for December delivery rose as much as 89 cents, or 1.1 percent, to US$80.03 a barrel in electronic trading on the New York Mercantile Exchange and traded at US$79.97 at 10:11 a.m. London time. Tuesday, the contract rose 24 cents to settle at US$79.14. Futures have gained 79 percent this year.

Prices have gained this week after a more-than-forecast jump in U.S. retail sales increased optimism that prospects for the global economy were improving. U.S. stock markets gained for a third day Tuesday. Asian equity climbed as well.

“We're seeing the rally in crude, the rally in equities and the rally in gold all highly correlated over the past six months,” said Alan Plaugmann, head of futures at Saxo Bank in a Bloomberg Television interview.

Energy producers in the U.S. idled about 43 percent of oil output in the Gulf of Mexico on Nov. 10 as Ida made landfall, the Interior Department's Minerals Management Service said.

The Louisiana Offshore Oil Port, used by tankers too large to dock at U.S. harbors, was closed for 3 1/2 days because of rough seas and high winds, Barb Hestermann, a spokeswoman for the oil terminal said Tuesday.

The Energy Department report will probably show stockpiles of crude oil climbed 300,000 barrels, according to the 17 analysts who provided crude estimates. Those looking for an inventory decline focused on disruptions caused by Ida.

Supplies of distillates, a category that includes heating oil and diesel, fell 850,000 barrels from 167.4 million the prior week, according to the survey.

Brent crude oil for January settlement rose as much as 97 cents, or 1.2 percent, to US$79.94 a barrel on the London-based ICE Futures Europe exchange. It was at US$79.90 a barrel at 10:11 a.m. local time. The contract climbed 21 cents, or 0.3 percent, to US$78.97 a barrel Tuesday.

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