Brent Trades at $60, Heating Oil Hits a more than Four-Month High
Workers adjust a valve of an oil pipe at Al Tuba oil field in Basra, southeast of Baghdad. (Reuters)
NEW YORK: Oil seesawed on Friday while heating oil hit a more than four-month high as severe cold weather crimped output at three US refineries, raising worries about higher crude supplies and a possible squeeze on refined products.
At least three refineries that account for more than two-thirds of the US East Coast’s output experienced significant disruptions due to single-digit temperatures that sent the entire Northeast into a deep freeze.
Bets on a further drop in the US oil rig count and short-covering in US crude futures ahead of the expiry of the front-month contract provided some support to oil, traders said.
“It’s sell crude, buy products today,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
“The issues with the East Coast refiners have certainly been weighing on the market, though people will also be wary of the rig count data due later in the day and the possible activity in US crude before March futures expire.”
The number of rigs drilling for oil in the US fell to its lowest since August 2011 last week. Oil services firm Baker Hughes Inc will provide updated data on the count at 1:00 p.m. EST (1800 GMT).
The March contract in US West Texas Intermediate (WTI) crude, which will go off the board at Friday’s settlement, was down 45 cents at $50.71 a barrel by 11:51 a.m. EST (1651 GMT).
Benchmark Brent crude for April was up 8 cents at $60.29, after falling to a week low of $57.80 on Thursday.
Brent’s premium to US crude rose to almost $9 a barrel, the widest in nearly six months.
US heating oil jumped more than 6 percent to $2.1368 a gallon, its highest since early December.
The heating oil rally came after Phillips 66 began experiencing extended delays in restarting a crude unit at its 238,000-barrel-per-day Bayway refinery in Linden, New Jersey, according to person familiar with the facility’s operations.
In Trainer, Pennsylvania, Delta Refinery said the facility’s cooling system, which normally draws water from the Delaware River, is partly frozen, and it had shut a fluid catalytic cracking unit.
Intelligence group Genscape reported that Philadelphia Energy Solutions Inc shut down a vacuum distillation unit at the Girard Point section of the 335,000 bpd refinery in Philadelphia.