Oil Prices

Crude oil prices dropped slightly
yesterday while a correction occurred on US crackspreads. Most refineries have
been largely spared by hurricane Sandy, though some are still experiencing
power outages. Only Phillips 66's Bayway refinery in New Jersey (238 kb/d) was
flooded. Other refineries in Sandy's path are restarting. Pipelines and
terminals still struggle to restore flows. But probably the impact on demand
will take more time to ease than the impact on refineries' production. On top
of Sandy's impact, a fire blazed out on a residual hydrotreater at BP's Texas
City refinery (400 kb/d) yesterday afternoon, with finally limited impact on
production.

The API report showed a slightly higher
than expected rise in crude stocks but distillate stocks dropped more than
expected in spite of higher refinery run rates (+1.1 % pt). Crude imports were
down 351 kb/d last week, products imports were off 327 kb/d, while refinery
runs were up 207 kb/d. Note that the weekly EIA report has been delayed to at
least tomorrow due to Sandy. And still no news from the Buzzard field

Brent 1st nearby prices remain stuck in a
small range. Supports stand at 108.75 then 106.5/9. Resistances are 109.9 then
111.3.