Oil Prices Bounce Higher

By GEORGE JAHN

VIENNA, Austria – Oil prices rose Wednesday, gaining back a small portion of losses the last three sessions that were driven by easing supply concerns.

Traders were keeping an eye on three tropical weather systems, one in the southwestern Gulf of Mexico, one entering the Caribbean Sea and one, Tropical Storm Karen, in the central Atlantic. But investors are not convinced any of the three directly threaten critical oil and gas infrastructure in the Gulf.

Light, sweet crude for November delivery on the New York Mercantile Exchange rose 62 cents to $80.15 a barrel by midday in European trading.

On Tuesday, the contract fell $1.42 to settle at $79.53 a barrel. The drop marked the third consecutive day of decline following eight straight sessions in which oil futures hit new records.

After floor trading ended Tuesday in the U.S., the federal Minerals Management Service said all evacuations from an earlier storm threat had ended from the Gulf of Mexico’s production platforms and drilling rigs. Almost all of the Gulf’s oil and gas production was back on line, the agency said.

At the height of the evacuations over the past weekend, 100 production platforms and 14 drilling rigs had been evacuated and 58 percent of the normal daily oil production and 25 percent of the normal gas production had been interrupted.

The recent three-day decline in prices ignited debate among analysts over whether the move is a correction in a bull market or the beginning of a long-term decline in crude prices.

There was little news affecting oil prices Tuesday as oil prices continued to drop from near $84 a barrel last week, analysts said.

If anything, the oil-related stories would seem to support higher prices. An opposition group in Nigeria, a major oil producer, has ended a cease-fire and said it will resume attacks on oil installations. Analysts also expect the government to report Wednesday that oil inventories fell last week.

U.S. crude oil stocks are expected to have fallen by 1.8 million barrels, on average, for the fifth-straight time in the week ended Sept. 21, according to a Dow Jones Newswires survey of analysts.

Inventories of distillates, which include heating oil and jet fuel, are forecast to have gained 1.1 million barrels while gasoline inventories are expected to have grown by about 200,000 barrels. Refinery use is expected to have declined 0.6 percentage point to 89 percent of capacity.

Still, Vienna’s PVM Oil Associates suggested the rise would be short-lived, saying it continued to hold to “expectations for a fall in oil prices” over the mid-term.

In London, November Brent crude rose 35 cents to $77.97 a barrel on the ICE futures exchange.

Nymex heating oil futures rose 0.74 cent to $2.1887 a gallon while gasoline prices rose 1.21 cents to $2.0499 a gallon. Natural gas futures dropped 1.2 cents to $6.348 per 1,000 cubic feet.