Wed, 27 Jan 1999, 9:30pm EST
NY Heating Oil, Gasoline Rise as U.S. Refineries Reduce Crude Processing
Heating Oil, Gasoline Rise as Refineries Cut Output (Update2)
(Updates with final prices in 4th-6th paragraphs; Adds
retail gasoline price forecast in 17th through 19th paragraphs.)
New York, Jan. 27 (Bloomberg) -- Heating oil and gasoline
rose for the first time in three days, pulling crude higher,
after an industry report of slower refining rates and falling
inventories raised expectations that a chronic surplus will ease.
Heating oil and gasoline both reduced a surplus from
inventories a year ago, the American Petroleum Institute said.
While some refiners are shutting down units in a seasonal switch
to gasoline production, others are cutting output because of weak
profit margins.
Higher petroleum product prices could mean ''a more
sustainable rally in crude oil,'' said Alan Struth, chief oil
economist at Bartlesville, Oklahoma-based Phillips Petroleum Co.
''Any recovery will have to be led by products,'' he said, whose
''prices have been pretty dismal.''
February heating oil rose 0.72 cent, or 2.3 percent, to
32.52 cents a gallon on the New York Mercantile Exchange.
February gasoline rose 1.23 cents, or 3.6 percent, to 35.45 cents
a gallon.
Crude oil for March delivery rose 26 cents, or 2.2 percent,
to $12.32 a barrel on the Nymex.
In London, March Brent crude oil rose 24 cents to $10.88 a
barrel on the International Petroleum Exchange.
The API said in a weekly report released after trading
yesterday that refinery output fell by 3.8 percentage points to
91.7 percent of capacity, the lowest rate since Oct. 23.
Price gains were accelerated by announcements that some
refiners are cutting back operations to switch some units to
emphasize gasoline production instead of heating oil in order to
be ready for the busy warm-weather driving season that starts in
May. Such cutbacks are normal this time of year.
Refinery Slowdowns
Yet refiners are cutting back even more than usual because
the price of gasoline and heating oil has fallen faster than the
price of crude oil, cutting refiners' margins by more than 25
percent so far this year, according to Bloomberg figures.
Valero Energy Corp. said today it cut the amount of crude
oil processed at two refineries because of low profit margins.
The company reduced crude processing at its Houston refinery to
45,000 barrels a day. The refinery can process 85,000 barrels a
day, and Valero had cut daily processing there twice over the
past few months, a spokeswoman said.
The San Antonio-based company also reduced crude processed
at its Krotz Springs, Louisiana, refinery to 72,000 barrels a day
from 80,000. Valero's 190,000-barrel-a-day refinery in Corpus
Christi, Texas, is out of service for about a month for planned
maintenance.
Valero joins Tosco Corp. and Sunoco Inc. in trimming the
amount of crude processed at some refineries.
Year-on-Year Inventories
Because of slowing refinery utilization, crude oil
inventories rose by 5.38 million, or 1.7 percent, the API
reported. Analysts anticipated a rise of between 2.1 million and
3.25 million barrels, according to a survey by Bloomberg News.
Supplies are 5.1 million barrels higher than a year ago, up from
a gap of 3.8 million reported last week.
U.S. distillate supplies, which include heating oil, fell
2.4 million barrels, or 1.6 percent, to 150.5 million barrels.
Analysts expected a drop of between 900,000 barrels and 1.8
million barrels. Stocks are 15.0 million barrels bigger than last
year, down from 15.6 million last week.
Gasoline inventories fell 2.43 million barrels, or
1.1 percent, from a five-year high, the API report showed.
Analysts had expected a rise of between 500,000 barrels and 1.1
million barrels. Stockpiles stand 4.4 million barrels larger than
a year ago, down from 8.2 million last week.
Implied gasoline demand, calculated from other figures in
the API report, rose 658,000 barrels to 8.6 million barrels a
day.
Gasoline futures prices will take from four to six weeks to
be seen at the pump, according to the U.S. Department of Energy.
Refinery production cutbacks now could boost U.S. gasoline retail
prices this spring by 15 percent, or 14 cents, David Costello, an
economist at the U.S. Department of Energy, said in an interview.
The average retail price of regular unleaded gasoline when it
peaks in May or June should be about $1.08 a gallon, up from last
week's 93.6 cents a gallon, said Costello, who is the economist
in charge of the Short Term Energy Outlook for the Energy
Information Agency division of the DOE.
Prices normally rise about 8 cents from January until June,
Costello said, helped by rising demand for summer travel at a
time shortly after refiners change over to emphasize gasoline
|
