Updated from 11:46 a.m. EST
Crude oil futures rebounded and cleared $63 Tuesday as the closure of the Houston Ship Channel hit its sixth day and expectations rose for a drop in weekly crude supplies.
Light, sweet crude rose 94 cents to close at $63.15 a barrel amid choppy trading as the January contract expired. Earlier in the session, crude futures hit a low of $61.65 on predictions of mild weather for the rest of this month. Prices have been erratic over the past week as trading alternatively focused on warm weather predictions and OPEC's move to cut production.
Heavy fog has shrouded the Houston Ship Channel and prevented tankers from reaching the refineries located there. Most refiners have been operating at normal rates except for the Deer Park refinery operated by
Royal Dutch Shell
. That facility typically processes 340,000 barrels of crude per day and has seen crude volumes drop slightly. By Thursday, forecasters expect the fog to lift.
The Sabine Neches Waterway reopened Tuesday and it was unclear whether the Calcasieu Ship Channel was back to full operation or not.
The closure of three shipping channels in Texas and Louisiana for five days likely shaved stockpiles of crude and distillates last week. Crude supplies probably dropped by 2.25 million barrels and distillates likely fell by 500,000 barrels, according to a
poll of energy analysts. Crude is processed into a variety of fuels, including diesel, heating oil and gasoline.
Even if crude supplies drop, they are currently nearly 4% higher than last year thanks to little hurricane activity in the Gulf of Mexico and mild temperatures.
Refining activity likely inched up by 0.50% to 89.6% last week as refiners ended seasonal maintenance. Expectations of flat gasoline supplies next week were propping up gasoline prices by 3 cents to $1.71 a gallon.
The U.S. Energy Administration will release its weekly supply tally at 10:30 a.m. EST on Wednesday.
Warm weather predictions for the rest of the month crimped prices of fuels used for heating. Natural gas rose 1 cent to $7.08 per million British thermal units, while heating oil lost 1 cent to $1.71 a gallon.
Mild temperatures come just as winter is set to officially begin on Thursday. In its 10-day outlook, the National Weather Service expects warmer-than-average temperatures to blanket the northern half of the country through Dec. 28.
Energy shares were trading up about 1.7% on the Amex Oil Index, which tracks 13 of the country's biggest refiners and oil companies.
were among the big gainers.
In stock market news,
trimmed its capital and exploration budget for next year by 10% to $3.6 billion. About $3.5 billion is earmarked for exploration and production, while $75 million will go toward refining and marketing. Hess shares were recently adding 1.3%.
Other oil companies, including
, have been decreasing their allotted expenses as soaring prices for labor, parts and equipment eat into the bottom line.