Posted on 08/05/2005 2:01:50 AM PDT by Jomini
Crude oil prices rose Friday on concerns gasoline supply in the United States may fail to meet peak demand during the summer driving season.
Midmorning in Singapore, light, sweet crude for September delivery gained 25 cents to US$61.63 a barrel in Asian electronic trading on the New York Mercantile Exchange which saw the contract reach an intraday high of US$61.88.
Gasoline gained slightly to reach US$1.8905 a gallon (3.8 liters) while heating oil rose a tad to US$1.708.
September Brent futures at London's International Petroleum Exchange opened 38 cents up from Thursday's settlement at US$60.50 a barrel, but slipped to US$60.44.
Analysts said the rally was driven by an array of concerns, ranging from breakdowns in U.S. refineries in the past two weeks to ongoing worries crude oil and distillates production will not meet peak global demand in the fourth quarter.
But traders were most worried that U.S. refiners could not quickly recover from shutdowns to bump up gasoline supplies, a fear that's exacerbated by the U.S. energy department report on Wednesday showing declines in gasoline inventories.
"Rapidly falling gasoline stocks and refineries' emphasis on turning out distillates add to gasoline worries," said New York based Energyintel analyst John van Schaik in a research note.
U.S. gasoline inventories declined by 4 million barrels to 205.2 million barrels, or 3 percent below last year's level. The supply of distillate fuel, which includes heating oil and diesel, rose by 1.5 million barrels to 127.3 million barrels or 5 percent above last year.
At least seven refineries have reported problems of one kind or another, ranging from fires at Chevron Corp.'s El Segundo, California, and BP Plc's Texas City refineries to the complete shutdown of ExxonMobil's plant in Joliet, Illinois. Together, the troubled refineries have throughput capacity of 1.7 million barrels a day, some 10 percent of total U.S. refining capacity.
Despite near-record high oil prices, strong demand has been bolstered by perceptions the global refining system was severely over-stretched, analysts said.
"There's a lot of trading activity in the oil market that's supporting prices, it's a reflection of concerns that the refining supply cushion is thin," said Lorraine Tan, research director at Standard & Poor's Investment Services in Singapore.
Aging refineries in the United States are running at nearly 100 percent utilization, and this increases the likelihood of operational problems as companies begin to slow down production of gasoline for summer and turn to heating oil for winter.oil.
Crude prices are 39 percent higher than a year ago, but would still have to surpass US$90 to reach the all-time inflation adjusted high set in 1980.
Oil both the Western jugular and the opposition sword as Qaeda feints with the suitcase and punches with the barrel.
J
Let's see if the rats want to continue to delay energy reform and cause shortages in the name of the environmentalists.
Interesting times, FRiends...
I hate those prices, but I suspect I'd hate shortages even worse. Gas at $2.30 a gallon is better than no gas at $1.80 a gallon--in my opinion, that is.
Okay, I can understand the refinery shortage problems (which I think are bogus, but...),
I can understand the changeover from gasoline to heating oil (which, again, I think is bogus, but...),
I can even understand the apprehension about some old fart that died in Saudi Arabia (which I know is bogus, but...),
but just how in the blue hell can the Hiroshima attack have anything whatsoever to do with oil price fluctuation?
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