Oil Rises

Crude oil rose on speculation that U.S. heating-fuel consumption will increase as a cold weather system moves across the eastern U.S. and a tanker owned by Saudi Aramco was hijacked by pirates.

Temperatures on the East Coast will be below normal from Nov. 22 to Nov. 26, according to the National Weather Service. A supertanker was hijacked by Somali pirates off the coast of Kenya, the U.S. Navy said. Oil fell earlier because Japan entered a recession and on signs that Chinese demand is falling.

Crude oil for December delivery rose $1.15, or 2 percent, to $58.19 a barrel at 10:06 a.m. on the New York Mercantile Exchange. Futures have tumbled 60 percent since reaching a record $147.27 on July 11.

The Saudi-operated Sirius Star was more than 450 nautical miles southeast of Mombasa when a group of pirates scaled the 10- meter (32-foot) side of the ship, according to the U.S. Navy.

Japan, the world’s third-biggest oil consuming country, contracted 0.4 percent in the third quarter, official figures today showed. It is the country’s first recession since 2001.

China National Petroleum Corp., the nation’s biggest producer, said demand has fallen sharply” since September because of credit-market turmoil. China is the world’s second- biggest oil consumer.

Leaders from the Group of 20 urged a broader policy response” to the financial crisis at a weekend meeting in Washington, citing the potential for additional interest-rate cuts and fiscal stimulus.

The Organization of Petroleum Exporting Countries reduced its forecast for average oil consumption next year by 530,000 barrels a day, or 0.6 percent, to 86.68 million barrels a day, according to its monthly oil market report. The International Energy Agency and U.S. Energy Department slashed demand projections last week.

Brent crude oil for January settlement rose $1.33, or 2.5 percent, to $55.57 a barrel on London’s ICE Futures Europe exchange.

TradingEconomics.com, Bloomberg.com
11/17/2008 7:48:53 AM