Crude Oil Rises to Six-Week High Above $80 on Total Strike.
Crude oil followed gasoline to a six-week high as strikes at Total SA refineries and depots in France boosted prices of refined products. Oil settled above $80 a barrel for the first time since Jan. 12 as gasoline futures gained 1.4 percent. Total, Europe"s biggest refiner, reported ?sporadic? fuel shortages at some gasoline stations in France. U.S. refineries operated below 80 percent of capacity for the five weeks through Feb. 12, according to Energy Department data.
?The Total strike is really the predominant thing,? said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy commodities. ?When you have that coupled with the situation in the U.S. with the low run rates, it"s constructive for the overall market.?
Crude oil for March delivery increased 35 cents, or 0.4 percent, to settle at $80.16 a barrel on the New York Mercantile Exchange. The March contract expired at the close of floor trading today. The more-active April contract gained 25 cents, or 0.3 percent, to $80.31.
Gasoline for March delivery rose 3.01 cents, or 1.4 percent, to $2.1158 a gallon, the highest settle since Jan. 11.
Workers at Total"s six French oil-processing plants and six of its 31 storage depots have been on strike since last week to protest against the permanent shutdown of refining at its Flanders plant in northern France.
Total will meet with unions tomorrow in an effort to end the dispute, Michael Crochet-Vourey, a spokesman for the Paris- based company, said in a telephone interview today.
The strike comes as weak demand has curtailed refinery production worldwide. The utilization rate at U.S. refineries fell to a 16-month low of 77.7 percent in the week ended Jan. 29, according to Energy Department data.
Crude futures climbed 7.7 percent last week as U.S. Commodity Futures Trading Commission data showed that hedge-fund managers and other large speculators increased bets on rising prices for the first time since mid-January.
Speculative net-long positions, the difference between orders to buy and sell the commodity, jumped 63 percent to 68,436 contracts on the New York Mercantile Exchange in the week ended Feb. 16, the CFTC said in its weekly report on Feb. 19. It was the first increase since the week ended Jan. 12.
Oil rebounded after dropping as much as 0.5 percent in intraday trading as the dollar erased gains. Advances in the dollar make oil and other commodities less attractive as an alternative investment.
The U.S. currency traded at $1.3612 against the euro at 2:57 p.m. in New York, little changed from Feb. 19. The dollar reached $1.3444 the same day, the highest level since May.
?There are solid reasons for the market to fall with the stronger dollar and winter demand coming to an end,? said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.
China, the world"s second-biggest energy consumer after the U.S., processed 29 percent more crude oil in January than a year earlier as the economic recovery spurred demand, the China Petroleum & Chemical Industry Association said today.
Crude oil processing volume reached 30.14 million metric tons (228 million barrels) last month while oil-product output increased 24 percent to 18.59 million tons, the industry body said on its Web site.
The International Energy Agency forecast earlier this month that global oil demand growth in 2010 will be driven entirely by economies outside the Organization for Economic Cooperation and Development, including China.
OECD countries are forecast to consume 45.5 million barrels a day in 2010, the IEA said on Feb. 11. That"s the same level as last year, even though the International Monetary Fund has raised its economic growth outlook for the region. Oil demand in non-OECD countries, where economic expansion is forecast at 6.1 percent, is estimated to rise 4 percent this year.
?OECD demand just doesn"t support? the $80 price, said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston. ?The market is still bumping up against very, very poor actual numbers in the OECD versus optimism about the emerging markets. That"s why the market is having trouble maintaining a serious direction.?
Crude oil supplies probably rose 1.9 million barrels last week from 334.5 million, based on the median of seven estimates by analysts surveyed by Bloomberg News. It would be the highest supply level since November. All the analysts forecast an increase. Refinery runs were forecast to remain steady at 79.8 percent, the survey showed.
Brent crude for April settlement gained 42 cents, or 0.5 percent, to $78.61 a barrel on the London-based ICE Futures Europe exchange, the highest price since Jan. 12.
Oil volume in electronic trading on the Nymex was 395,717 contracts as of 2:56 p.m. in New York. Volume totaled 731,090 contracts Feb. 19, 22 percent above the average of the past three months. Open interest was 1.3 million contracts.