(Bloomberg News) Oil rose from the lowest level in almost four months in New York on speculation that demand will soon rebound after Atlantic superstorm Sandy made landfall on the U.S. East Coast.

Futures climbed as much as 0.8 percent after the storm came ashore in southern New Jersey at 8 p.m. local time yesterday and drove floodwaters to life-threatening levels in a region with 60 million residents. Phillips 66, Hess Corp., NuStar Energy LP and PBF Energy Inc. reduced refinery operations on the U.S. East Coast because of Sandy.

"Most of the refineries should soon be back to normal operations, which will increase demand for crude," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "It also looks like the storm will have a relatively small impact on fuel demand."

Crude oil for December delivery rose 41 cents, or 0.5 percent, to $85.95 a barrel at 10:40 a.m. on the New York Mercantile Exchange. The contract settled at $85.54 yesterday, the lowest since July 10. Prices are down 13 percent this year.

Floor trading is suspended for a second day on the Nymex because of the storm, CME Group Inc., the exchange's owner, said in an e-mail. Electronic trading is operating normally.

Brent oil for December settlement slipped 24 cents to $109.20 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude premium to West Texas Intermediate contract narrowed to $23.25. The spread widened for a sixth day yesterday to $23.90.

Refinery Closings

Six refineries curbed production because of Sandy, accounting for 1.22 million barrels of the area's crude- processing capacity of 1.29 million barrels a day, according to data compiled by Bloomberg. The storm may cut East Coast gasoline supplies to the lowest level since at least 1990, based on Energy Department data.

Sandy, now termed a post-tropical cyclone packing maximum sustained winds of 65 miles (105 kilometers) per hour, was centered 90 miles west of Philadelphia at 5 a.m. local time, according to the National Hurricane Center. The storm was moving west-northwest at 15 mph, and was expected to weaken steadily over the next two days and move north into western New York state today. The cyclone will reach Canada tomorrow.

New York, New Jersey, Baltimore, Long Island, Delaware Bay and Connecticut ports were closed to vessel traffic by the U.S. Coast Guard, halting tanker deliveries that help supply the region's refineries with crude.

Colonial Pipeline

Colonial Pipeline Co., which operates the largest system connecting the U.S. Gulf Coast and the Eastern Seaboard, began shutting delivery lines along the East Coast as terminals in Virginia, Maryland, New Jersey and New York stopped operations. The company planned to close Line 3, an 825,000-barrel-a-day link running to Linden from Greensboro, North Carolina, at 7 p.m. New York time yesterday, a bulletin to shippers showed.

The U.S. Energy Information Administration said it will postpone the release of its weekly report on oil stockpiles and production from tomorrow because of storm-related delays. The data may be published Nov. 1, the Energy Department's statistical unit in Washington said in an e-mailed statement.

The American Petroleum Institute plans to release its weekly report on supply and demand at the usual time of 4:30 p.m. today in Washington, said Carlton Carroll, a spokesman for the group. The API will alert subscribers if it decides to delay the data, he said.