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Oil prices hover near US$65 a barrel, supported by U.S. refinery snags
Published in Saudi Press Agency on 18 - 05 - 2007


Oil prices gained slightly Friday
on persistent concern that U.S. refiners are not producing
enough gasoline to meet peak summer demand following
reports of more refinery snags, according to AP.
Light, sweet crude for June delivery rose 16 cents to
US$65.02 a barrel in electronic trading on the New York
Mercantile Exchange afternoon in Europe. The contract on
Thursday climbed US$2.31 to settle at US$64.86 a barrel,
the highest close this month.
Brent crude for July delivery lost 50 cents to US$69.77 a
barrel on the ICE Futures exchange in London.
With the Northern Hemisphere's summer driving season set
to begin in just over a week, energy traders have been
concerned that gasoline supplies are not catching up to
demand, and a string of planned or unexpected refinery
shutdowns have fueled such worries.
«It seems that every day there are announcements of
refinery glitches in the U.S., and this rash of refinery
snags is driving the crude futures market,» said Victor
Shum, energy analyst with Purvin & Gertz in Singapore.
Murphy Oil Corp. said its 125,000-barrel-a-day Meraux,
Louisiana, refinery has shut down a crude unit for minor
repairs, Dow Jones Newswires reported. Shutdowns at a
number of U.S. refineries were also reported by BP PLC,
ConocoPhillips and Valero Energy Corp., analysts said.
«The market's immediate concern is the tight gasoline
supply situation in the U.S.,» Shum said.
Tightness in the U.S. gasoline markets could ease
midsummer due to lower demand and repaired refineries
returning to production, according to a note released
Friday by Bernstein Research.
«We think inventories will start to rebuild as (refinery)
outages unwind and demand growth remains below average.
This will take time though, and prices will likely be
supported until July,» said senior research analyst Neil
McMahon.
U.S. gasoline stocks have declined at an «exceptional»
rate and are currently 7 percent below their seasonal
average, largely due to unplanned refinery outages and
extended maintenance at refineries worldwide, according to
Bernstein.
Market tightness has also been exacerbated by a 10 percent
decline in U.S. gasoline imports from February through
April.
The U.S. Energy Information Administration reported
Wednesday that gasoline stocks, while increasing to 195.2
million barrels last week, remained well below the average
for this time of year.
The EIA says in a report on its Web site that over the 12
consecutive weeks from February to April, gasoline
stockpiles in the U.S. declined by a cumulative total of
more than 34 million barrels, or 15 percent. That makes it
the sharpest decline in gasoline inventories over a
consecutive 12-week period, according to the agency's
recorded historical data.
Shum said crude futures were also supported by news of a
planned nationwide strike in Nigeria, Africa's largest oil
exporter, at the end of the month.
Labor leaders in Nigeria on Thursday called a two-day
strike on May 28 in protest of last month's elections. The
strike is scheduled to coincide with the inauguration of a
new government. The unions argue that the April elections
which gave a sweeping victory to President-elect Umaru
Yar'Adua and the ruling People's Democratic Party were
fraudulent and unacceptable. They have called for a rerun
of the vote.
«In Nigeria, the news of a general strike towards the end
of the month means here we go again, more supply
disruptions out of Nigeria,» Shum said.
A series of recent bombings, kidnappings and protests have
slashed production by nearly 1 million barrels per day in
Nigeria, representing around one-third of its total
capacity.
At the same time, oil production resumed at Nigeria's
Bonny Light field, although it was unclear if flow was back
to normal levels, Dow Jones Newswires reported.
Royal Dutch Shell PLC said «some» production had been
restored, without specifying the amount. Output had been
cut by 170,000 barrels a day for nearly a week while
protesters occupied a pipeline valve.
Also giving prices a boost, OPEC Secretary General Abdalla
Salem El-Badri on Thursday in Bali, Indonesia, said global
oil markets are amply supplied and do not need an increase
in crude oil production before the summer.
Heating oil futures dropped less than half a cent to
US$1.9272 a gallon (3.8 liters) while natural gas prices
rose 8 cents to US$8.115 per 1,000 cubic feet.
-- SPA


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