Oil prices jumped to $50.25 a barrel in open-call trade but retreated later to $48.94 a barrel. The rebound reflects renewed concerns about slow growth in distillate supplies ahead of the Northern Hemisphere winter.  January and February are expected to be colder than usual, and December can turn out milder, according to the revised WSI outlook released on Monday.

 

The fact that distillates inventories, including heating oil and diesel, are not growing at the expected rate can in part be attributed to growth in domestic consumption caused by economic recovery. U.S. distillate demand is approximately 8% higher than last year pumped up by strong trucking and manufacturing activity. This in turn led to the national inventories being 15% lower as compared to this time last year for the ninth straight week.

 

It is expected that the U.S. Energy Information Administration (EIA) report for the week to Nov. 19 to be published on Nov. 24 will report a 400,000-barrel rise in distillates, a relatively small rise that will drive oil prices further up despite steady increase in crude stockpiles driven by increased OPEC output. OPEC oil production surged to about 27.9 million bpd in October, exceeding official limits set on Nov 1 by 900,000 bpd.