Crude Oil Rises a Second Day on Lower U.S. Gasoline Supplies

By Christian Schmollinger

Aug. 14 (Bloomberg) -- Crude oil rose for a second day after a U.S. Energy Department report yesterday showed a bigger- than-forecast decline in inventories of gasoline as refiners shut units and imports fell.

Gasoline supplies dropped 6.39 million barrels to 202.8 million barrels last week, the biggest decline since October 2002 when tropical storms disrupted Gulf of Mexico output. Gold, silver and nickel also rebounded on speculation declines since July were exaggerated.

``The product numbers were weaker than expected and that pushed the prices higher,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The oil price had come down fairly sharply over the previous few days, so there was a reaction to that.''

Crude oil for September delivery rose as much as 87 cents, or 0.8 percent, to $116.87 a barrel and was trading at $116.85 at 9:32 a.m. Singapore time on the New York Mercantile Exchange.

Yesterday, futures increased $2.99, or 2.6 percent, to settle at $116 a barrel, the biggest one-day gain since July 30. Prices are up 61 percent from a year ago.

U.S. gasoline stockpiles were forecast to drop 2.15 million barrels, according to a Bloomberg News survey. Oil prices fell 5.8 percent in the previous three days to yesterday's session.

Refineries operated at 85.9 percent of capacity, down 1.1 percentage points from the week before, the report showed. Analysts forecast a 0.5 percentage-point drop.

Petroleum-product imports fell 17 percent to 2.6 million barrels a day, the lowest since the week ended April 1, 2005, the report showed. Crude oil imports dropped 5.3 percent to 9.66 million barrels a day, the lowest since the week ended July 4.

Crude Inventories

Inventories of crude oil fell 316,000 barrels to 296.5 million, the department said. Supplies were forecast to rise 300,000 barrels, according to the median of responses by 13 analysts surveyed by Bloomberg News.

U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 2.8 percent from a year earlier, the department said. Gasoline consumption averaged 9.4 million barrels a day over the period, down 1.9 percent from a year ago.

Gasoline use declined 2.1 percent through July, the American Petroleum Institute said in a monthly report released yesterday. Auto sales fell to the lowest since 1993 in the month, causing U.S. retail sales to drop for the first time in five months. Consumer spending makes up more than two-thirds of the U.S. economy.

Damage Assessment

Prices of oil have slipped more than $30 from a record $147.27 on July 11 amid signs that U.S. fuel demand is falling because of record pump prices and a slowing economy.

U.S. motorists drove less in June for an eighth consecutive month, the Federal Highway Administration said. Vehicle-miles traveled fell 4.7 percent from a year earlier, the Washington- based agency said in a report yesterday. The month's 12.2 billion-mile drop brought the total since November to 53.2 billion miles, the agency said.

BP Plc and Botas International Ltd., a Turkish operating company, started damage assessment at an oil pipeline in the eastern part of the country following a fire.

BP, Europe's second-biggest oil company, is now able to access the Baku-Tbilisi-Ceyhan pipeline after it cooled down, company spokesman Toby Odone said yesterday. The assessment will be conducted for ``a week or so,'' he said.

``It'll take quite a while to work out what has happened,'' Odone said by phone from London. Turkish authorities are also investigating the cause of the explosion, he said.

Oil Pipeline

The fire on the link, which has a 1 million barrel-a-day capacity, started on Aug. 5 following an explosion in the Erzincan province. The Kurdistan Workers' Party claimed responsibility for the attack.

BP's venture declared force majeure on exports from the Baku-Supsa oil link, Odone said. The pipeline from Azerbaijan through Georgia to the Black Sea was closed for a second day as a precaution. Russian President Dmitry Medvedev Aug. 12 ordered a halt to a Russian offensive in Georgia after six days of fighting.

Brent crude oil for September settlement rose $2.32, or 2.1 percent, to settle at $113.47 a barrel on London's ICE Futures Europe exchange yesterday. Futures touched $110.47 on Aug. 12, the lowest since May 2. The contract expires today.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.