Oil Rises to Five-Week High on Signs U.S. Fuel Supplies Fell

By Trisha Huang and Gavin Evans

Sept. 6 (Bloomberg) -- Crude oil rose to a five-week high in New York on speculation U.S. gasoline stockpiles had fallen as refiners reduced production.

A U.S. government report today will probably show supplies of the motor fuel declined 1.3 million barrels last week as refinery operating rates fell to a two-month low, according to a survey of 15 analysts. U.S. gasoline sales dropped for a second week, MasterCard Inc. said yesterday. Labor Day on Sept. 3 was the last long weekend of the U.S. summer break.

``Traders are buying oil on expectation of bullish fuel inventory data in the Energy Department report,'' said Anthony Nunan, assistant general risk manager at Mitsubishi Corp. in Tokyo. ``Most are expecting a further drawdown in gasoline stocks, which are already at a very low level.''

Crude oil for October delivery climbed as much as 53 cents, or 0.7 percent, to $76.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That was the highest intraday price since Aug. 3. Oil traded at $76.17 a barrel at 1:49 p.m. in Singapore.

The contract rose 65 cents, or 0.9 percent, to $75.73 yesterday, the highest close since Aug. 2. Prices rose 2 percent the previous two sessions as Hurricane Felix neared the Gulf of Mexico before striking Nicaragua and Honduras and weakening to a tropical depression.

``We should have seen a decline because the hurricane premium was eroding,'' James Ritterbusch, of Ritterbusch & Associates in Galena, Illinois, said yesterday. ``This is a sign that the market has a lot of strength. We will be up around $77 before long.''

Brent, Inventories

Brent crude oil for October settlement gained as much as 59 cents, or 0.8 percent, to $74.93 a barrel on the London-based ICE Futures Europe exchange. Futures traded at $74.76 a barrel at 1:40 p.m. Singapore time. It rose 0.6 percent yesterday.

U.S. gasoline stockpiles held 192.6 million barrels on Aug. 24, the lowest since Sept. 9, 2005, and the equivalent to 20 days of supply, the lowest since the records began in 1991.

Today's Energy Department report will probably show motor- fuel supplies fell as U.S. refiners used 90 percent of their plant capacity, based on the analyst survey. Refineries operated at 90.3 percent of capacity a week earlier.

Gasoline for October delivery was at $2.0052 a gallon after adding 0.3 percent to $1.9965 yesterday. Heating oil was at $2.1115 a gallon after rising 1 percent to $2.09 yesterday.

Oil Stockpiles

U.S. oil inventories held 333.6 million barrels on Aug. 24, 10.8 percent more than the five-year average for the period. Stockpiles probably fell 2.2 million barrels last week, according to the survey. Distillate supplies, including heating oil and diesel, probably gained 1 million barrels.

``Refinery runs and hurricane activity will dominate the market for the next few weeks,'' Antoine Halff, the head of energy research at Fimat USA Inc. in New York, said yesterday.

The Atlantic hurricane season began June 1 and ends Nov. 30. About a third of all storms reported take place in September, according to National Hurricane Center records.

Oil reached a record $78.77 a barrel on Aug. 1 before sliding to $68.63 three weeks later as summer gasoline demand waned and falling equity and credit markets added to signs U.S. economic growth may slow.

U.S. share prices fell and corporate borrowing costs rose yesterday on signs the U.S. housing slump may be deepening.

The Organization for Economic Cooperation and Development also lowered its 2007 forecasts for U.S. economic growth to 1.9 percent from 2.1 percent and said it may be reduced further because of the collapse in subprime mortgages.

Last Updated: September 6, 2007 02:01 EDT