LONDON (Reuters) - Oil hovered at $61 on Friday on concerns over heating fuel supply in the face of a looming winter and slow output recovery in the U.S. Gulf of Mexico.
U.S. light crude (CLc1) inched up 14 cents to $61.23 a barrel by 6 a.m., after gaining 43 cents on Thursday. London Brent crude (LCOc1) traded up 27 cents at $59.41 a barrel.
``Though there seems to be a lot of crude around, the long-term view is bullish,'' said Tony Nunan at Mitsubishi Corp. in Tokyo. ``The U.S. Northeast will get colder and people may be concerned with middle distillate supplies.''
Demand for distillate fuels such as heating oil peaks in the northern hemisphere's winter. Temperatures in the U.S. Northeast, the world's biggest heating oil market, were expected to be 3 to 8 degrees Fahrenheit below normal until the weekend.
A rise in U.S. fuel demand could come while the recovery of oil and natural gas production from the storm-battered Gulf of Mexico -- home to more than a quarter of U.S. domestic output -- remains at a crawl.
Some 1.022 million barrels per day (bpd) or 68 percent of the Gulf's crude output stayed shut on Thursday, along with 5.559 billion cubic feet per day or nearly 56 percent of gas output, the U.S. government said.
Dampening hopes of an early recovery, the U.S. Interior Department said on Thursday that energy operations in the Gulf of Mexico would not return to normal until late March next year.
SIGNALS ON DEMAND
A larger-than-expected fall last week of 1.6 million barrels in U.S. distillate stocks -- including heating oil and diesel -- kept alive concerns over winter supplies, despite a large 4.4 million-barrel build in crude inventories.
Demand for distillate fuels was 1.4 percent lower in the last four weeks compared to the same period last year, U.S. government data showed this week. Oil markets are carefully watching for any signs that high prices are hurting demand.
``Sales show no clear evidence of demand destruction,''
said
Deutsche Bank in an analysis on the results of
Implied oil demand from China, the world's second-biggest oil consumer, jumped 9.7 percent in September, the highest since January, based on Reuters calculations.
But China's demand has slowed overall this year after a 15 percent demand growth last year helped fuel oil's rally.
Top Asian refiner Sinopec Corp. said on Friday it would delay some of its refining projects in line with slower demand in China.
``We would like to limit the growth of our refining capacity, now that market demand for refined oil products has fallen back to normal levels,'' Chief Financial Officer Zhang Jiaren said.
A strike threat at Europe's largest refinery could further strain a stretched global refining system. Workers at Shell's 418,000-bpd Pernis plant in Rotterdam threatened to walk out on Monday in a dispute over pensions.
A one-day strike in Belgium over government plans to raise the retirement age disrupted shipping at Antwerp but refineries were unaffected.