Updated from 11:07 a.m. EDT
Oil prices staged a late-afternoon rally and settled above $58 Tuesday following the closing of natural gas platforms in the Gulf of Mexico and traders filling short positions.
Light sweet crude closed at $58.73 a barrel, up 37 cents on Nymex. The December contract fell as low as $57.05 in anticipation of another increase in domestic crude stockpiles and predictions of warmer weather.
Crude's last-minute rally had a mixed effect on the rest of the energy sector. Heating oil fell 1 cent to $1.58, while wholesale unleaded gasoline rose 1 cent to $1.46 a gallon. Both of their November contracts expired today.
The shutdown of 22 natural gas platforms in the Gulf caused natural gas prices to shoot up 11 cents to close at $7.53 per million British thermal units. Columbia Gulf Transmission Co. closed the facilities Monday after discovering a pipeline leak, but does not know when they can expect to reopen,
reported. The amount of natural gas is less than 500 million cubic feet.
For much of the trading day, expectations of milder weather were pushing down prices as low as $7.06 per million British thermal units. The National Weather Service predicts that temperate weather will blanket much of the country, except for the Northeast, over the next 10 days.
Fuel inventories are currently as high as 14% above last year, thanks to mild temperatures and low heating demand. Crude stockpiles are expected to have climbed by 2.7 million barrels last week, but the details won't be known until Wednesday when the U.S. Energy Department's weekly supply report is released.
During the autumn, refiners typically undergo seasonal maintenance to prepare for the winter heating season, and they produce less gasoline and distillates from crude.
With refining capacity lower, production of gasoline and distillates is expected to have dropped last week. A
poll of analysts expects gasoline inventories to drop by 1 million barrels and distillates to fall by 1.4 million barrels.
Domestic stockpiles are getting another boost after the country's largest oil field returned to full production four months ahead of schedule. Prudhoe Bay in Alaska, which is owned by
, is back to full output of 400,000 barrels per day, BP said Monday.
In August, BP closed the western half of the field after discovering leaks and corrosion there. The eastern half, though, has been producing around 200,000 barrels since.
Brimming supplies come in handy at a time when the Organization of Petroleum Exporting Countries is trimming output. Starting tomorrow, OPEC will cut production by 1.2 million barrels per day, though some analysts are questioning whether all 11 members will do so because they stand to lose millions in oil revenue.
The group, which controls 40% of the world's crude, may reduce production at its next meeting in December if prices don't rally above $60. Some oil ministers have suggested OPEC will take another look at further reductions then.
The Amex Oil Index was rising 0.9%, buoyed by the uptick in crude prices.
were posting the largest advances among the index's drilling and refining companies.
saw net income jump by 86% to $1.6 billion, or $2.55 a share, in its latest quarter, thanks to higher production, refining and marketing margins. During the third quarter, sales climbed to $24.3 billion, up from $23.2 billion last year.
Shares of Valero were up 0.2% to $52.25 after it beat analysts' profit projections of $2.28 a share.
soared to $1.62 billion, or $4.52 a share, in the third quarter from $770 million, or $2.09 a share, during the same period last year. Higher oil prices and fatter refining and marketing margins were behind the surge.
Revenue, however, fell to $16.6 billion this year from $17.1 billion in the comparable 2005 period.