Oil rises as Hess refinery closure boosts gasoline

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Oil prices rose on Monday, led by a 2 percent gain in U.S. gasoline following news that Hess Corp will close a New Jersey refinery, tightening supplies in the giant Northeast gasoline market.

Front-month U.S. February gasoline futures, set to expire on Thursday, surged 2 percent on news that Hess plans to close the 70,000 barrel-per-day refinery in Port Reading, New Jersey, by the end of February.

The loss of the plant, the latest in the region to fall victim to poor profits, tightened the supply outlook for the Northeast, which will likely have to rely more on imports and supplies from the Gulf Coast, according to analysts.

Crude also got a lift from U.S. government durable goods data showing new orders jumped 4.6 percent last month, more than expected. Gains were limited by a separate report showing pending home sales fell 4.3 percent in December.

Oil traders have been closely watching macro economic data for signs of improvement that could bolster fuel demand.

"Crude got a boost from the durable goods but the home sales number disappointed," said Phil Flynn, analyst at Price Futures Group in New York.

The oil futures complex kept drawing support from turmoil in Africa and the Middle East, getting an additional boost from news of an attack on an oil pipeline in Algeria by suspected Islamist militants.

Brent March crude rose 20 cents to settle at $113.48 a barrel, having swung from $112.60 to $113.80. The $113.80 session peak was 4 cents below Friday's session high.

U.S. March crude rose 56 cents to settle at $96.44 a barrel.

Front-month February U.S. RBOB gasoline rose 5.94 cents, or 2.07 percent, to settle at $2.9348 a gallon, having pushed as high as $2.9442 during the session.

U.S. February heating oil rose only 0.48 cent, to settle at $3.0616 a gallon.

The February refined products expire on Thursday.

AWAITING FEDERAL RESERVE, JOBS DATA

The Federal Reserve, whose policy-setting Federal Open Market Committee concludes a two-day meeting on Wednesday, has said it expects to keep short-term interest rates exceptionally low to help support the economy.

U.S. nonfarm payroll figures due on Friday are likely to show the jobless rate unchanged in January and that the U.S. economy created 155,000 jobs, according to economists polled by Reuters.

Manufacturing output in China and the United States is rising at its quickest pace in about two years while German business morale improved for a third straight month in January, fuelling expectations of higher oil demand.

In addition to Syria's conflict reinforcing worries about the region's oil supply and supporting crude futures, a fifth day of violence in Egypt prompted Egypt's president to declare a state of emergency on Sunday in an attempt to end a wave of unrest.

World powers have asked Iran to hold a new round of talks over its nuclear program in February, while expressing disappointment over Tehran's reluctance to schedule negotiations.

An aide to Iran's Supreme Leader Ayatollah Ali Khamenei was quoted as saying on Saturday that Tehran would consider any attack on Syria an attack on Iran. (Additional reporting by Robert Gibbons in New York, Christopher Johnson in London and Jessica Jaganathan in Singapore; Editing by David Gregorio and Nick Zieminski)



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