Brent crude rose and hit a three-week high intraday Monday as equities had a broad rally led by financials and on a rise in consumer spending and relief that damage from Hurricane Irene to the New York area was less severe than expected.
Continue Reading Below
"The spending data helped Wall Street take off, and oil rose on the hope some of that spending will be on gasoline," said Phil Flynn, analyst at PFGBest Research in Chicago.
"The weaker dollar index also was supportive, along with the fact that refiners didn't seem to get hurt by Irene," Flynn added.
Global equities advanced ahead of Wall Street's open on hopes the Federal Reserve might eventually launch a third round of quantitative easing (QE3) after Fed Chairman Ben Bernanke left the door open for further action in a speech on Friday at an annual event in Jackson Hole, Wyoming.
Brokers and analysts said crude futures were supported by news that most U.S. oil refiners and energy companies were restoring operations after Hurricane Irene, though at least one crude unit was shut because of flooded pumps.
U.S. gasoline futures seesawed and heating oil futures's gains lagged behind crude on relief that Northeast region refineries did not experience catastrophic damage like facilities on the Gulf Coast after Hurricane Katrina. Widespread flooding and power outages were also expected to dampen fuel demand after Irene.
Trading volumes were thinner due to a public holiday in the U.K. and New York-area traders out in the aftermath of the storm. Brent volumes were 64 percent and U.S. volumes 50 percent below 30-day averages.
Brent October crude rose 71 cents to $112.07 a barrel by 2:50 p.m. (1850 GMT), having reached $112.73, highest intraday price since Aug. 4.
U.S. October crude, up a third straight session, rose $1.90, or 2.23 percent, to settle at $87.27 a barrel, having reached $87.62, highest intraday price since Aug. 17.
Brent's premium to U.S. crude was lower at $24.81 a barrel, well off its record $26.69 on Aug. 19.
REFINERS ASSESS IRENE'S IMPACT
The U.S. East Coast oil industry began to assess the impact of Hurricane Irene's weekend brush with the coast.
A crude unit at the Girard Point section of Sunoco Inc's Philadelphia refinery shut because of flooded crude-charge pumps, lowering some production, a source said. Meanwhile, the Marcus Hook section of the refinery was increasing rates.
ConocoPhillips Inc's 238,000-barrels-per-day (bpd) Bayway refinery in Linden, New Jersey, was restarting, a source familiar with refinery operations said.
LIBYA, SYRIA TURMOIL
Libyan rebel forces converged on Muammar Qaddafi's hometown of Sirte, hoping to solidify their revolution as they continued to root out forces still loyal to Qaddafi.
Libya's new government plans to restart production at two eastern oil fields in mid-September and resume shipping oil from Tobruk by the end of September.
Ras Lanuf, Libya's largest oil refinery, is intact despite recent intense fighting, and staff are preparing a restart, its general manager told Reuters.
Libya produced about 1.6 million bpd of crude oil before the civil war.