Crude Gains a Second Day on U.S. Stockpile Decline as Storms Threaten Gulf

By Ben Sharples - Sep 8, 2011 6:01 AM GMT+0700

Oil climbed for a second day in New York on speculation a storm building in the Gulf of Mexico poses a threat to supply in the U.S., amid shrinking crude stockpiles in the world’s biggest consumer.

Futures gained as much as 0.9 percent after the industry- funded American Petroleum Institute said inventories fell 2.97 million barrels last week. An Energy Department report today may show supplies slid 2 million barrels as Tropical Storm Lee shut output, according to a Bloomberg News survey of analysts. Another cyclone, Nate, formed off Mexico, becoming the third now churning in the Atlantic basin.

“Output outages in the Gulf of Mexico and a low pressure system over Mexico’s Bay of Campeche were the key drivers,” John Peters, a senior economist at Commonwealth Bank of Australia, said in a note today.

Crude for October delivery advanced as much as 77 cents to $90.11 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.87 at 8:47 a.m. Sydney time. The contract yesterday rose $3.32 to $89.34, the highest close since Aug. 3. Prices are 20 percent higher the past year.

Brent oil for October settlement gained $2.91, or 2.6 percent, to $115.80 on the London-based ICE Futures Europe Exchange yesterday. The European benchmark contract closed at premium of $26.46 to U.S. futures, compared with the record settlement of $26.62 on Sept. 6.

DOE Report

The Energy Department will release its weekly stockpile data at 11 a.m. today in Washington. Both the API and government reports are a day late because of the Labor Day holiday on Sept. 5.

Gasoline supplies dropped 871,000 barrels last week, according to API data. The Energy Department report may show they declined 1.4 million barrels, according to the median of 15 analyst estimates in the Bloomberg News survey.

Oil-supply totals from the API and the department have moved in the same direction 71 percent of the time in the past year. The API collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for its weekly survey.

Nate, with winds of 45 miles (72 kilometers) per hour about 125 miles west of Campeche, Mexico, joins Hurricane Katia and Tropical Storm Maria. Nate is forecast to be a Category 1 hurricane with winds of 75 mph in two days.

Computer models suggest Nate will either go ashore in Mexico south of the oil- and gas-producing region or near Brownsville, Texas, said Travis Hartman , a meteorologist at commercial forecaster MDA EarthSat Weather in Gaithersburg, Maryland.

About 36.9 percent of U.S. oil production and 18.1 percent of natural gas output from the Gulf of Mexico has been halted after Tropical Storm Lee passed through the region, the Bureau of Ocean Energy Management, Regulation and Enforcement said yesterday. The Gulf is home to 27 percent of U.S. oil output and 6.5 percent of the country’s natural gas production.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net