Oil Higher in Early Trade

NEW YORK (DTN) -- Spot-month oil futures on the New York Mercantile Exchange moved higher Tuesday morning, supported by tension in the Middle East, expectations for domestic petroleum stock draws and news a North Sea crude pipeline shut a week ago won't be back in service until probably early January.

A DTN survey of analysts showed an estimated 5.25 million barrel in United States crude oil inventories for the week-ended Dec. 15 with stocks at the Cushing, Oklahoma delivery point for West Texas Intermediate crude estimated to have declined by 2.0 million bbl.

This would be the sixth consecutive draw for crude and the longest run of stock draws since July.

The survey also shows gasoline stockpiles likely fell 1.4 million bbl while distillate fuel supply likely dropped 1.25 million bbl last week.

The American Petroleum Institute will release its weekly oil data today at 4:30 PM ET while the Energy Information Administration is scheduled to release its own weekly statistics at 10:30 AM ET Wednesday.

Overseas, the 445,000-bpd Forties crude pipeline remains shut one week after a crack was found in Scotland. Ineos, operator of the pipeline, today said repairs could take up to four weeks. Forties is one of the four crude streams feeding Brent, the international marker. The outage would keep the Brent market tight for many more weeks, said analysts.

Oil futures were also buoyed by geopolitical risks after a missile was fired at Saudi Arabian capital Riyadh from Yemen, escalating tension in the oil rich Middle East region. The Saudis and Iranians are fighting a proxy war in Yemen and both are major oil producers and members of Organization of Petroleum Exporting Countries.

The January West Texas Intermediate crude futures contract will expire at the close of regular trade in the afternoon today, so most of the trade is expected to concentrate on the February WTI contract.

At last look, NYMEX January WTI crude oil futures traded 24cts higher at $57.40 bbl, with February contract traded up 26cts at $57.48 bbl. ICE February Brent gained 22cts to $63.63 bbl.

NYMEX January ULSD futures rose 1.72cts to $1.9424 gallon while January RBOB futures edged up 0.90cts to $1.6815 gallon.

George Orwel can be reached at george.orwel@dtn.com