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Oil up 4 percent; gasoline adds fuel to rally on Libya, Brazil
November 3, 2015 / 12:47 AM / 2 years ago

Oil up 4 percent; gasoline adds fuel to rally on Libya, Brazil

NEW YORK (Reuters) - Crude prices settled up about 4 percent on Tuesday as a rally in U.S. gasoline and diesel amid an outage on a key pipeline system added support to oil markets already boosted by an industry strike in Brazil and force majeure for Libyan crude loadings.

A worker watches a crude oil train approach the loading rack at the Eighty-Eight Oil LLC's transloading facility in Ft. Laramie, Wyoming July 15, 2014. REUTERS/Rick Wilking

The market also ended up ahead of a report from industry group American Petroleum Institute (API) suggesting a 2.8 million-barrel build in U.S. crude inventories last week. The build matched forecasts by analysts in a Reuters poll. [API/S] [EIA/S]

The U.S. Energy Information Administration will issue official stockpiles data on Wednesday.

“If you look at the supply situation, the bigger picture is bearish. But the price action suggests the path of least resistance is higher for now,” said Scott Shelton, oil broker and commodities specialist at ICAP in Durham, North Carolina.

Brent LCOc1 settled up $1.75, or 3.6 percent, at $50.54 a barrel, after hitting a session high at $50.91.

U.S. crude CLc1 finished up $1.76, or 3.8 percent, at $47.90. The day’s peak was $48.36.

U.S. crude extended gains briefly in post-settlement trade, after the API data.

“Both oil contracts are displaying bullish characteristics, although neither has yet to make a decisive breakthrough,” said Fawad Razaqzada, technical analyst at forex.com. He pegged resistance for Brent at $51-$52 and for U.S. crude at above $48.50.

An oil workers’ strike in Brazil, the ninth biggest global producer, that began on Sunday cut around half a million barrels of output in the first 24 hours and has slowed state-run Petrobras’ daily oil output by around 25 percent, according to the workers’ union.

In Libya, the export terminal at the eastern port of Zueitina was closed and force majeure has been declared on crude oil loadings, market sources said.

U.S. gasoline futures RBc1 settled up 5 percent, while ultra low sulfur diesel (ULSD) HOc1 ended almost 4 percent higher after the Colonial Pipeline COLPI.UL said it has suspended operations at its Cedar Bayou facility in Texas due to flooding.

Colonial connects the Gulf Coast refining hub to southern and eastern U.S. markets through more than 5,500 miles (8,850 km) of a pipeline system running refined products.

The gasoline “crack” CL-RB1=R, or profit for refining crude into the motor fuel, also rallied, hitting a one-month high above $13 a barrel.

Additional reporting by Simon Falush in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Cynthia Osterman

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