Oil prices rose Thursday as a tropical depression near Mexico raised concerns about possible disruptions to oil and gas production, according to AP. A tropical depression put parts of Mexico's Gulf Coast under a storm watch Thursday, while Tropical Storm Karen strengthened to near hurricane status in the open Atlantic Ocean. The 13th depression of the season could strengthen into a named storm over the next day in the southwestern Gulf of Mexico, according to forecasters at the U.S. National Hurricane Center in Miami. The Nymex crude contract _ which rose 77 cents to settle at US$80.30 a barrel Wednesday despite an increase in U.S. crude and gasoline inventories _ gained 67 cents to US$80.97 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. November Brent crude added 52 cents to US$77.95 a barrel on the ICE Futures exchange in London. In its weekly report, the U.S. Energy Department's Energy Information Administration said Wednesday that crude inventories rose by 1.8 million barrels during the week ended Sept. 21, countering the average estimate of analysts surveyed by Dow Jones Newswires that oil supplies would fall by 1.8 million barrels. Gasoline inventories grew by 600,000 barrels last week, three times the 200,000-barrel increase analysts had expected. Refinery utilization plunged by 2.7 percentage points to 86.9 percent of capacity. Analysts had expected an 0.6 percentage point decline. Lower refinery activity could reflect the impact of Hurricane Humberto, which shuttered several Gulf Coast refineries two weeks ago. But it could also reflect the beginning of heavy seasonal maintenance in the Midwest, according to analysts. The EIA reported that inventories of distillates, which include heating oil and jet fuel, grew last week by 1.6 million barrels, more than the expected 1.1 million-barrel increase. Heating oil futures rose by more than a penny to US$2.1932 a gallon (3.8 liters) while gasoline prices added 0.28 cent to US$2.0302 a gallon. November natural gas futures lost 2.5 cents to US$7.021 per 1,000 cubic feet. Crude futures reached nearly US$84 a barrel last Thursday, the day the October contract expired. November futures, the new front-month contract, haven't traded above US$82.40 a barrel, and had fallen for three straight trading sessions, settling below US$80 Tuesday. Some analysts attributed oil's late reversal to rise on Wednesday to a technical factor: Strength in the spread, or difference, between future oil contracts. Investors closely scrutinize such spreads for signs the market's so-called backwardation structure _ in which nearer-month oil contracts are more expensive than later month contracts _ might be ending. Backwardation is a sign that supplies are tight, and tends to boost near-term futures prices. When backwardation didn't decline or disappear in the wake of the EIA report, and indeed increased in some cases, some investors saw a sign that oil prices are likely headed higher in the near term. Vienna's PVM Oil Associates noted that the development «could trigger speculative buying from funds.»
