Oil Rises After Unexpected Decline in U.S. Crude Stockpiles

Oct. 8 (Bloomberg) -- Oil rose in New York after a government report showed an unexpected decline in U.S. crude supplies, boosting optimism about a demand recovery in the biggest energy-consuming nation.

Oil pared yesterday’s 1.9 percent decline after the Energy Information Administration said crude stockpiles fell 978,000 barrels last week. A 2 million-barrel gain was forecast in a Bloomberg analyst survey. Alcoa Inc., the first Dow Jones Industrial Average company to report for the three months through Sept. 30, posted an unexpected third-quarter profit.

The drop in crude supplies “is probably something the market has moved on,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “Alcoa reported much better-than-expected earnings after U.S. markets closed, and that is something that could be playing into stock market futures and the oil price.”

Crude oil for November delivery gained 42 cents, or 0.6 percent, to $69.99 a barrel in electronic trading on the New York Mercantile Exchange at 11:38 a.m. Sydney time. Yesterday, the contract dropped $1.31 to settle at $69.57. Prices have gained 57 percent since the start of the year.

U.S. stocks rose for a third day yesterday as banks climbed on an analyst upgrade of Bank of America Corp. and Wells Fargo & Co.’s plan to boost credit-card rates. The Standard & Poor’s 500 Index rose 0.3 percent in New York. The Dow Jones Industrial Average slipped 5.67 points, or 0.1 percent. Australia’s benchmark S&P/ASX 200 Index rose 0.3 percent at 11:03 a.m. in Sydney.

Typhoon Alert

Typhoon Melor smashed into Japan near the city of Nagoya, today bringing winds of 139 kilometers (86 miles) an hour and causing disruptions to fuel distribution. Nippon Oil Corp. halted shipments from a refinery in Yokohama, near Tokyo, and maritime shipments from a plant in Sendai in northern Japan, a company spokesman said.

Idemitsu Kosan Co. suspended shipments of refined oil products from a refinery near Tokyo, a company spokeswoman said.

In the U.S., Valero Energy Corp. said a yesterday hydrocracker was shut after a “small fire” at its Corpus Christi, Texas, refinery.

A weaker dollar supported oil prices as investors turned to commodities as a hedge against inflation. The dollar traded at $1.4717 against the euro at 11:08 a.m. in Sydney, from $1.4691 yesterday. The U.S. currency depreciated earlier this week on concern the Federal Reserve will be slower to raise interest rates than policy makers in other nations.

Crude Stockpiles

U.S. inventories of crude oil dropped 978,000 barrels to 337.4 million, the Energy Department report showed. Imports fell 4.6 percent to 9.1 million barrels a day last week.

Distillate fuel inventories climbed 679,000 barrels to 171.8 million last week, the report showed. Supplies were estimated to have declined 400,000 barrels, according to the analyst survey. Gasoline stockpiles climbed 2.94 million barrels to 214.4 million.

Refineries operated at 85 percent of capacity, up 0.4 percentage point from the previous week. Analysts forecast that utilization rates would drop 0.3 percentage point. U.S. refiners often schedule repairs and upgrades in September and October as gasoline consumption declines and before heating-oil use rises.

Brent crude oil for November settlement gained 53 cents, or 0.8 percent, to $67.73 a barrel on the London-based ICE Futures Europe exchange, at 11:38 Sydney time. Yesterday, the contract fell $1.36, or 2 percent, to close at $67.20 a barrel on the London-based ICE Futures Europe exchange.