Crude Oil Prices Rise from Slow Down in Alaska and North Sea

Crude oil prices rose the most in almost a month after the Trans-Alaska Pipeline System limited the amount of oil it will carry, and a North Sea platform was shut because of a gas leak.

The Alaska restrictions were imposed after high winds disrupted loadings at the port of Valdez several times in the past week, according to Alyeska Pipeline Service Company. U.S. supplies of distillate fuel and gasoline fell last week, according to a Bloomberg News survey before an Energy Department report tomorrow.  “The combination of the Alyeska and North Sea news coming before tomorrow's inventory reports and a long weekend has us moving higher,'' said Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York.

Crude oil for January delivery rose $1.37, or 2.3 percent, to close at $60.17 a barrel on the New York Mercantile Exchange, representing the biggest one-day gain since Oct. 25. It was the highest close for a contract next to expiration since Nov. 9. Prices are up 4.3 percent from a year ago.  “Prices have come down for so long,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.  Oil has declined 23 percent from the record of $78.40 a barrel reached July 14, amid concern that fighting in Lebanon would spread through the Middle East.

The Trans-Alaska Pipeline System ships an average 800,000 barrels a day, said Mike Heatwole, a spokesman for the pipeline. The pipeline has cut volumes to 35 percent of normal.   Marathon Oil said its Brae Alpha platform in the North Sea remains shut after a gas leak was discovered, halting output of crude oil and gas condensate. The leak at the platform, located 155 miles northeast of Aberdeen, was discovered yesterday and led Marathon to shut the facility.

Distillate fuel supplies fell 950,000 barrels from 135 million barrels, according to the median of forecasts by 14 analysts before tomorrow's report. Stockpiles of gasoline probably slipped 1.03 million barrels from 200.3 million barrels, the survey showed.  “The physical market is very tight and the market is finally reflecting that,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures.  “The Alaska news is helping send us higher but the main reason is the underlying tightness. We have a very strong gasoline market and it will get a lot colder.''

OPEC is due to meet Dec. 14 in Abuja, Nigeria's capital.  Venezuela, Algeria and Nigeria have called on the organization to scale back production at the meeting after OPEC announced last month it would reduce output by 4.4 percent starting Nov. 1.  “We're waiting to see how the OPEC cuts pan out,'' said Eugene X. Hodge, a managing director at John Hancock Financial Services.  “Unfortunately, it takes a while before we know how much they actually cut,'' he explained.

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