Updated from 10:50 a.m. EST
Oil futures shot past $60 for the first time in well over a week Tuesday on reduced oil shipments from Alaska and ahead of expected supply drops of gasoline and distillates.
The Trans Alaska Pipeline System is currently operating at 25% of its capacity because tankers have been unable to load, thanks to high winds and seas at the Port of Valdez. It was the third time in the past week that tankers were not able to load crude. The pipeline has a daily capacity of 800,000 barrels and stretches 800 miles from Prudhoe Bay to Valdez.
The strong winds are expected to last until Thursday, according to the National Oceanic and Atmospheric Administration.
shaved its daily production from Prudhoe Bay by 25% to 35% to account for the reduction in capacity. Production at Prudhoe Bay was down between early August and the end of October as BP fixed pipeline leaks and corrosion. During that time, BP shipped only 200,000 barrels of crude per day, about half the field's total production.
Traders are expecting crude stockpiles to rise again in the U.S. Energy Department's weekly supply update, which is due out Wednesday at 10:30 a.m. EST. In a
poll of energy analysts, inventories of crude were expected to rise by 400,000 barrels, because many refiners have shuttered some units for seasonal maintenance.
closed one gasoline unit for repairs at the country's largest refinery in Baytown, Texas.
Gasoline supplies likely fell by 1 million barrels, and distillates, which include heating oil and diesel, probably tumbled by 1.1 million barrels, according to the same
survey. For the past six weeks straight, inventories of distillates have fallen; this makes analysts nervous that the country won't have enough at the start of the winter. Still, inventories are currently 6% above where they were during the same period last year.
But refining capacity likely inched up by 0.6% to 87.9% last week. Refiners typically operate at lower capacities in the fall and spring as they repair units ahead of the peak production seasons in the winter and summer.
Light, sweet crude for January delivery tacked on $1.37 to finish trading at $60.17 a barrel. Oil futures last traded this high on Nov. 9. Heating oil rose 6 cents to $1.73 a gallon, and unleaded gasoline increased 7 cents to $1.63 a gallon.
Natural gas finished down 3 cents at $7.98 per million British thermal unit on mild weather projections through next week. The National Weather Service expects mild weather to cover the Northeast, Southeast and Midwest.
Supplies of natural gas are expected to drop by 3 billion cubic feet in the Energy Department's weekly update, according to analysts polled by
. Cold temperatures last week likely drove up heating demand and reduced inventories. Natural gas is used by some utilities to generate electricity. The Energy Department will release the figure on Wednesday at noon EST, a day earlier because of the Thanksgiving holiday on Thursday.
Trading had been subdued so far this week because the New York Mercantile Exchange is shuttered on Thursday and Friday in observance of Thanksgiving. Traders typically don't like to make large bets before a four-day weekend, because prices could swing wildly in overseas markets.
Rising crude prices were pushing up energy shares by 1.7% on the Amex Oil Index.
were posting the largest gains on the index, up by as much as 2.9% apiece.