Oil up with Wall Street as U.S. goes to the polls

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Oil rose 3 percent on Tuesday, rallying a second straight session and receiving a lift from gains on Wall Street as investors awaited U.S. election results.

U.S. stocks climbed as some investors made bets that Republican challenger Mitt Romney could pull off a victory in the presidential vote, pushing up defense and energy shares.

President Barack Obama and Romney were neck-and-neck as Americans cast votes for president and Congress, polls showed on Tuesday.

"The stock market is up and that's helping crude," said Mark Waggoner, president at Excel Futures Inc.

Analysts and traders agreed that a clear election result, no matter who wins, would end the uncertainty about who will be in office going forward.

Oil moved higher ahead of Wall Street's election day gains, attracting bargain hunters after crude futures posted three consecutive weekly losses.

"The market was oversold (last week)," said Christopher Bellew, a broker at Jefferies Bache. "It has been a very long move downwards from $115 down to about $105, so it's quite likely that we are going to continue upwards."

Brent December crude rose $3.34 to settle at $111.07 a barrel, having pushed back above the 100-day moving average of $108.47. Brent jumped nearly 2 percent on Monday, rallying after falling during the session to $104.76, its lowest price since Aug. 1.

U.S. December crude rose $3.06 to settle at $88.71 a barrel. U.S. crude also ended higher on Monday, but only after recovering from an $84.34 session low, the lowest price since July.

U.S. gasoline futures also pushed higher as the effort to restart the New York Harbor energy network after Hurricane Sandy hit a bump on Monday when Phillips 66 said its Bayway refinery in Linden, New Jersey, will take two to three weeks to resume operations.

News on Monday of BP Plc's crude unit overhaul at its Whiting, Indiana, refinery added support for gasoline.

The Whiting news also helped increase Brent's premium to U.S. crude on the expectation it will raise crude oil stockpiles at the Cushing, Oklahoma, delivery hub for the U.S. crude contract.

"The maintenance at the Whiting refinery and the Bayway refinery remaining shut after the storm are helping push RBOB up," said John Kilduff, partner at Again Capital LLC in New York.

The S&P GSCI index, one of two leading commodity indexes for investors, will cut the weighting of U.S. crude oil futures by 6.25 percentage points next year while increasing Brent by 4 percentage points, owner S&P Dow Jones Indices said late on Monday, also lending support to Brent's premium to U.S. crude.

U.S. December RBOB gasoline futures moved up 7.87 cents to settle at $2.6989 a gallon, also a 3 percent jump.

U.S. December heating oil , the benchmark distillate contract, rose 7 cents to settle at $3.0529 a gallon, back above the 200-day moving average of $3.0284.

U.S. OIL INVENTORIES

U.S. crude oil inventories are expected to have risen last week, by 1.8 million barrels, while gasoline and distillate stocks are expected to have dropped, a Reuters survey of analysts showed on Tuesday.

The American Petroleum Institute (API) will release its weekly oil data at 4:30 p.m. EST (2130 GMT) on Tuesday, with the government's report following on Wednesday.

LOWER NORTH SEA PRODUCTION

North Sea crude oil production that underpins the Brent contract is set to drop 5,000 barrels per day in December from November, loading programs showed on Tuesday.

Maintenance at the North Sea Buzzard field had supported crude, especially Brent, in recent weeks.

Turmoil in the Middle East, including fighting in Syria and Iran's dispute with Israel and the West about Tehran's nuclear program, continue to support crude futures, especially Brent, because of Europe's proximity to the region and greater dependence on supply from producers in the area. (Additional reporting by Alice Baghdjian in London and Ramya Venugopal in Singapore; Editing by Peter Galloway and Marguerita Choy)



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