Crude Oil Rises on Speculation of Supply Strain in Second-Half

Crude oil rose, heading for its biggest two-week gain since January, on speculation refiners may lack the capacity to produce enough heating oil for the northern hemisphere winter.

Forecasts for more and stronger hurricanes than usual this year are also raising concern supplies may be disrupted, as they were last year by Hurricane Ivan, said analysts including Kevin Norrish of Barclays Capital. OPEC is pumping almost all it can to let stockpiles grow before a fourth-quarter peak in demand.

“The problem is that once we do get into the winter period, the demand for heating oil will go up to a level where it’s very difficult for the refining sector to cope,” Norrish said. “There’s very little OPEC can do to tackle that problem. $60 will probably be a price that reflects people’s concern about what’s likely to happen in the fourth quarter.’
Bloomberg