Thursday, March 4, 2010

Oil Trades Near $81 a Barrel as Refinery Operating Rates Gain

March 4 (Bloomberg) -- Crude oil traded near $81 a barrel after rising as a U.S. government report showed that refinery operating rates climbed to the highest level since October, bolstering demand.

Oil rose to a seven-week high yesterday after the Energy Department report showed refinery utilization increased 0.7 percentage point to 81.9 percent in the week ended Feb. 26. Analysts surveyed by Bloomberg News forecast that there would be no change. Inventories of crude oil climbed 4.03 million barrels, more than three times what was estimated.

“Refinery run rates increased strongly, which should whittle down the huge oversupply of crude oil,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “This market just wants to go higher, even when there is bearish news.”

Crude oil for April delivery traded at $80.94 a barrel, up 7 cents, in electronic trading on the New York Mercantile Exchange at 10:10 a.m. Sydney time. Yesterday, the contract increased $1.19, or 1.5 percent, to $80.87, the highest settlement since Jan. 11.

Total U.S. fuel demand, averaged over the past four weeks, was 19.3 million barrels, up 3 percent from a year earlier, the Energy Department said.

Oil also advanced as the dollar weakened, increasing the investment appeal of commodities. The common currency rose after Greece approved an additional 4.8 billion euros ($6.6 billion) of deficit cuts. The dollar traded at $1.3705 per euro at 10:13 a.m. Sydney time, from $1.3697 yesterday.

Economic Optimism

Service industries in the U.S. accelerated in February more than anticipated, indicating the economic expansion may soon create jobs following the worst employment slump in the post- World War II era. The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy, rose to 53 in February from 50.5 the prior month.

Stockpiles of crude oil rose to 341.6 million, the highest level since August, the Energy Department report showed. Supplies were forecast to rise 1.28 million barrels, according to analysts surveyed by Bloomberg News before the report.

An increase in oil supplies on the U.S. West Coast was responsible for much of the nationwide gain, the report showed. Stockpiles there climbed 2.31 million barrels to 51.2 million. The region’s distribution system is isolated from the rest of the country.

Brent crude oil for April delivery climbed $1.07, or 1.4 percent, to $79.25 a barrel on the London-based ICE Futures Europe exchange yesterday.