Oil dips as Sandy looms large
Oil fell for the first time in three days in New York while gasoline rose as refineries curbed operations before Hurricane Sandy strikes the US East Coast.
West Texas Intermediate crude futures slid as much as 0.6 per cent, while prices of the motor fuel advanced as much as 1.9 per cent.
Sandy will probably make landfall tomorrow, according to a US National Hurricane Centre advisory.
Phillips 66, NuStar Energy LP and Hess said they were shutting or reducing output at New Jersey refineries as a precaution against the storm that may become the worst to hit the region in 100 years.
‘‘The primary consideration would be disruption to refinery infrastructure and that has the potential to disrupt markets and cause local and regional product shortages,’’ said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
Crude for December delivery dropped as much as 50 cents to $US85.78 a barrel in electronic trading on the New York Mercantile Exchange and was at $US86.05 at 10.34am Singapore time.
Prices are down 13 per cent this year.
Brent oil for December settlement dropped 22 cents to $US109.33 a barrel on the London-based ICE Futures Europe exchange.
The front-month European benchmark grade’s premium over the WTI contract was at $US23.29.
As Hurricane Sandy loomed, New York, New Jersey and Delaware Bay ports were closed to vessel traffic by the US Coast Guard, halting oil tanker deliveries that may affect the region’s plants.
There are seven refineries in the area with a combined capacity of about 1.29 million barrels a day, according to data compiled by Bloomberg.
Phillips is in the process of shutting its 238,000 barrel-a-day Bayway refinery and expects the plant to be fully idled today.
Hess said yesterday it would begin cutting rates at its 70,000 barrel-a-day Port Reading plant at 6pm local time, while NuStar said its 74,000 barrel-a-day Paulsboro asphalt refinery would shut today.
The New York Mercantile Exchange will close floor trading today because of Sandy, CME Group, its owner, said in an emailed statement. Electronic trading of energy and other Nymex products will be unaffected.
Gasoline in New York was up 1.85 cents at $US2.7176 a gallon after rising 5.09 cents to $US2.75 a gallon.
Prices settled at $US2.6991 a gallon on October 26, the highest in more than a week.
Oil in New York has technical support along its lower Bollinger Band, around $US85.83 a barrel today, according to data compiled by Bloomberg. Futures on October 26 traded below this indicator before settling above it. Buy orders tend to be clustered near chart-support levels.
Hedge funds slashed bets on rising oil prices for the fourth time in five weeks, cutting net-long positions by 17 per cent in the seven days ended October 23, the Commodity Futures Trading Commission’s Commitments of Traders report on October 26 showed.
It was the least since the week ended July 31.