Energy Roundup: Oil Ends Above $98

Weak Dollar and the Fed Boost Oil Futures

Oil prices rose sharply, settling at a record over $98 a barrel.

Oil futures, which offer a hedge against a weak dollar, picked up momentum as the dollar fell to a new low against the euro, and continued higher after the U.S. Federal Reserve forecast slowing growth and tame inflation next year.

Light, sweet crude for January delivery surged $3.39 to settle at a record $98.03 a barrel on the New York Mercantile Exchange after rising as high as $98.30 earlier.

Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Energy futures got a lift from reports of problems at two oil facilities. A Valero Energy Corp. refinery in Memphis, Tenn., that processes 180,000 barrels of crude a day shut down for 10 days of unplanned maintenance. And a Royal Dutch Shell PLC plant that converts bitumen from Alberta oil sands into 155,000 barrels a day of synthetic crude oil was temporarily shut because of a fire.

December heating oil futures climbed 8.59 cents to settle at a record $2.6901 a gallon, while gasoline futures for December delivery rose 6.99 cents to settle at $2.4515 a gallon.

Natural gas futures fell 31 cents to settle at $7.477 per 1,000 cubic feet on the Nymex.

Analysts Forecast Higher Oil and Gas Inventories

The Department of Energy releases its weekly report on petroleum inventories Wednesday morning. Crude oil stocks are expected to rise, according to a Dow Jones Newswires survey of analysts.

Analysts on average think inventories will increase by 800,000 barrels, while gasoline inventories are seen growing by 700,000 barrels. They expect stocks of distillate -- which include heating oil and diesel fuel -- to fall by 400,000 barrels.

Refinery use is estimated to rise by 0.4 percentage point to 88.1 percent of capacity.

Analysts participating in the survey tend to base their estimates on expectations of a "normal" week, without unusual factors such as variations in imports and deliveries. Unexpected developments often result in "surprise" rises or falls in inventories versus analysts' weekly predictions.

UBS Rates Exxon Mobil and Hess "Buy"

UBS Investment Research analyst William A. Featherston upgraded Exxon Mobil Corp. shares to "Buy" from "Neutral," and raised his 12-month price target to $96 per share from $92.

"Exxon Mobil has declined 10 percent in the last month despite continued strength in oil prices," the analyst wrote in a note to investors. But he pointed out that over the longer term Exxon closely tracks the price of oil, which bodes well for higher share prices. "We believe the market selloff has provided an attractive opportunity to buy arguably the world's best oil company."

Exxon Mobil shares rose $3.71, or 4.4 percent, to $87.82.

Featherston also upgraded Hess to "Buy" from "Neutral," raising his target to $84 from $73. Hess shares added $3.32, or 4.9 percent, at $71.25.

Featherston joined a group of analysts who raised their forecasts for West Texas crude prices. He revised his 2007 price to $71.10 per barrel from $66.35, and now sees the 2008 price at $74 per barrel, up from $65.

Exxon in Libya Exploration Deal

Exxon's Libyan subsidiary signed an exploration and production sharing agreement with Libya's National Oil Corp.

The agreement includes four blocks, about 110 miles off the Libyan coast in water depths of 5,440 feet to 8,700 feet. Exxon Mobil committed to a five-year program of seismic exploration and one deepwater exploration well.

The agreement also stipulates an unspecified signing fee, a training program for Libyan oil workers and support for education in the country.

Demand Rises at the Gas Pump -- Along with Prices

A weekly survey by MasterCard SpendingPulse showed demand at the gasoline pump ticked up last week despite another rise in gas prices.

For the week ending Nov. 16, gasoline demand at the pump increased 0.1 percent compared with the previous week. Weekly demand was just short of the comparable week in 2006 -- down 0.5 percent.

"Following a month of week-over-week declines in demand, we thought declines would subside at some point," study author Michael McNamara said in a phone interview. "We could be seeing a bottoming out, but we'll have to see."

McNamara said he is also watching the year-over-year change in the four-week moving average for demand, which is now down 2 percent from a year ago, the lowest for that number since April 2006.

Nationwide, average pump prices for a gallon of regular rose 5 cents per gallon from the previous week, a change of 1.6 percent. At $3.10 per gallon, the average price is up 39 percent from a year ago.

SpendingPulse is a macroeconomic indicator of national retail sales based on aggregate sales activity in the MasterCard payments network, together with estimates for all other payment forms, including cash and check. MasterCard SpendingPulse does not represent MasterCard financial performance.

S&P Raises Teco Energy to Investment Grade

Standard & Poor's Ratings Services raised Teco Energy Inc.'s junk corporate credit rating to investment grade and affirmed its rating on the holding company's utility unit, Tampa Electric Co.

The rating agency raised Teco's junk corporate credit rating of 'BB' by two notches to an investment grade rating of 'BBB-' and backed Tampa Electric's investment grade 'BBB-' rating.

Standard & Poor's also assigned an investment grade corporate credit rating of 'BBB-' to Teco Finance Inc. S&P expects the company will assume part of Teco's $3.5 billion of debt.

"The impending sale of Teco's marine transportation business, Teco Transport, will allow the company to accelerate a debt-reduction plan that will restore its balance sheet to an investment-grade level," said Todd Shipman, a Standard & Poor's credit analyst. He said divesting Teco Transport will also help the company's credit quality.

Lawyer Says BP Refinery Settlement Too Low

An attorney for workers killed and injured in the 2005 explosion at BP PLC's Texas City, Texas, refinery wants a plea agreement between BP and the federal government rejected, because he thinks the proposed $50 million fine should be increased to $1 billion.

Attorney David Perry also asked the presiding judge to step aside, because he was a partner in one of BP's law firms.

Last month, BP and the Justice Department agreed that the oil giant would pay a $50 million fine and plead guilty for its role in the explosion that killed 15 workers and injured 180 others at the company's Texas City plant.

The blast happened during the restarting of a hydrocarbon isomerization unit used in the refining process. The victims were near a vent stack that erupted when a distillation tower became overpressurized after it was flooded with hydrocarbons.

40 Dead in Saudi Pipeline Blast

Saudi Arabia's state oil company said 40 people died in a gas pipeline explosion. It happened Sunday during maintenance work about 19 miles from the Hawiyah gas plant.

The fire did not disrupt gas supplies nor was there any link between the explosion and the OPEC summit taking place over the weekend in Riyadh, Saudis officials said.

Aramco is the world's largest oil producer. The Hawiyah plant produces 310,000 barrels of ethane and liquefied natural gas daily.

--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to .