U.S. crude inventories dropped 3.21 million barrels last week, the biggest decline since July, after imports plunged, the Energy Department reported yesterday. Demand for gasoline and other products rose to an average 21.5 million barrels a day, the highest since the week ended Dec. 23, 2005.
``The market was led by products, gasoline in particular,'' said Randy Simpson, vice-president of supply and trading at New West Petroleum Inc. in Sacramento, California. ``Implied demand for gasoline has gone through the roof.''
Crude oil for December delivery rose as much as 32 cents, or 0.5 percent, to $61.72 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 8:30 a.m. in Sydney.
The contract jumped $2.05, or 3.5 percent, to $61.40 yesterday, the highest since Sept. 29 and the biggest one-day gain since March.
U.S. oil stockpiles, already above-average, were expected to gain 3 million barrels last week as refiners shut units for pre- winter maintenance, according to a Bloomberg news survey of 15 analysts. Gasoline stockpiles fell 1.3 million barrels, more than twice the decline forecast.
``It's clearly very bullish,'' Peter Linder, an energy analyst and senior adviser with DeltaOne Capital Partners in Calgary, said yesterday. ``We've already seen the beginning of winter and we'll start to see OPEC cuts next week. I'm convinced we've seen the low prices for the year.''
Cold Weather
Oil reached a 10-month low of $56.55 a barrel on Oct. 20, when the November contract expired. December oil has gained 3.9 percent this week as cold temperatures boosted heating demand in the northern U.S. and after the Organization of Petroleum Exporting Countries said they will cut production by 1.2 million barrels a day starting Nov. 1.
Reformulated gasoline for November delivery was at $1.53 a gallon, after rising 3.6 percent yesterday. Heating oil was at $1.74 a gallon, after rising 2.6 percent yesterday.
Gasoline and heating oil had found a ``pretty solid base'' around $1.50 and $1.65 gallon respectively the past month, New West's Simpson said. The ``unexpected and reasonably bullish inventory numbers'' had given bulls in the market an excuse to push prices higher, he said.
Oil reached a record $78.40 on July 14 on concern there was not sufficient spare production capacity if Israel's attack on Lebanon that month disrupted supplies from the Middle East, source of a third of the world's oil.
Nigeria Seizures
Oil also rose yesterday after Chevron Corp. and Royal Dutch Shell Plc. said their ventures in Nigeria, Africa's biggest oil producer, had four pumping stations seized as part of villagers' protests in the Niger delta.
About 15,000 barrels a day of oil output have been halted at Chevron's Robertkiri flow station, Femi Odumabo, a spokesman for the U.S. company's local venture, said by phone today from Lagos.
Three Shell flow stations -- Ekulama 1 and 2 and Belema -- have also been affected by the protest, said Eurwen Thomas, a Shell spokeswoman in London. Thomas declined to comment on any impact on production. The Ekulama 1 station, which pumps about 9,000 barrels a day, had already been closed following a militant attack in early October.
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