Oil nears $50 a barrel after US refinery snag
Tuesday, January 25, 2005 8:25:05 PM
reuters.com
By Richard Valdmanis
NEW YORK, Jan 25 (Reuters) - U.S. oil prices flirted with $50 on Tuesday, jumping to their highest level in eight weeks after a fire at a big Louisiana refinery slowed the plant's fuel production.
The gains built on recent strength from a cold snap in the Northeast that fired up furnaces in the world's largest heating oil market and on trader jitters ahead of an OPEC production policy meeting Jan. 30.
New York crude settled up 83 cents to $49.64 a barrel, after hitting a peak of $49.75 in open-call trade, the highest level since Nov. 30. London Brent gained 95 cents to $46.96 a barrel after hitting $46.99, the highest since Nov. 4.
Dealers said the strength tracked a rally in gasoline futures after ConocoPhillips <COP.N> confirmed it had been forced to slow production at its Belle Chasse, Louisiana, refinery after a fire on the weekend.
New York gasoline futures surged 4.55 cents to $1.3445 a gallon after hitting $.13480 in open-call trade, the highest level since late October.
"All of this has kept us with a bullish bias," said Tom Bentz of BNP Paribas. "The cold really helped early in the week, and today there were a few refinery issues."
Oil prices have been climbing steadily in recent weeks as arctic cold blew into the U.S. Northeast after a mild start to the winter, boosting demand for heating oil.
U.S. supplies of the key winter fuel were running about 4 percent below last year, according to the most recent government figures, and analysts were predicting the cold would trigger further declines in stockpiles.
Below-normal temperatures are expected to last another week before a thaw gives the market a reprieve. Forecasters are calling for a warmer-than-normal February and March.
SUPPLY WOES, OPEC JITTERS
The market on Tuesday also drew support from concern about attacks on Iraq's oil infrastructure with the election there approaching, and from disruptions in Nigeria.
Iraq's southern crude supplies have flowed relatively smoothly at about 1.5 million barrels per day (bpd) in the run up to the elections, though the country's northern exports have been halted for more than a month.
Royal Dutch Shell Group <RD.AS> <SHEL.L> said Tuesday it shut 35,000 barrels per day of crude oil production in Nigeria's southeastern Abia state following community protests, continuing a spotty record from the oil-rich nation.
Talks to avert a planned strike by Nigeria's main oil unions were adjourned to Wednesday after failing to resolve a dispute over alleged police harassment of local workers, union leaders said on Tuesday.
Oil traders are also on alert for any surprises on Jan. 30, when the Organization of the Petroleum Exporting Countries meets to debate production policy.
OPEC members look to be moving toward a rollover in the cartel's output ceiling, as prices hovering near $50 make it unlikely that the group will tighten its taps despite fears of a potential oversupply in the second quarter.
Kuwait's Oil Minister Sheikh Ahmad al-Fahd al-Sabah said on Tuesday that OPEC should keep its output unchanged as prices remain high and stocks are not building too fast.
OPEC production fell 800,000 bpd in January as producers implemented their agreed 1 million bpd cut, tanker tracker Petrologistics said in a preliminary estimate.
China's economy, a driving force behind last year's surge in oil demand, expanded by 9.5 percent in the year through the fourth quarter, beyond analysts' expectations. |
