Oil Prices Extend Gains Above $72 a Barrel
Thursday May 11, 6:31 am ET
By Gillian Wong, Associated Press Writer
Oil Prices Extend Gains Above $72 a Barrel on Renewed Supply Concerns
SINGAPORE (AP) -- Crude-oil futures rose Thursday after a refinery snag in Texas and the fatal shooting of an American oil worker in Nigeria renewed supply concerns despite U.S. government data that showed domestic gasoline stocks rose.
ADVERTISEMENT
Light, sweet crude for June delivery rose 33 cents to $72.46 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.44 to settle at $72.13 a barrel Wednesday.
In its weekly petroleum report, the U.S. Energy Department said crude-oil inventories rose last week by 300,000 barrels to 347 million barrels, or roughly 5 percent above year-ago levels. Gasoline inventories climbed by 2.4 million barrels to 205.1 million barrels, or almost 4 percent below last year. It was the second straight week in which gasoline stocks rose.
But traders brushed aside the inventory report, choosing instead to focus on a 15,000 barrels-per-day reduction in gasoline output over the next few days due to repairs at a Valero Energy Corp. refinery unit in Texas City, Texas.
"So we've had two weeks of stock builds in gasoline, but the market says: 'Big deal, the absolute level of gasoline stocks is still below year-ago levels, and we're two weeks away from the summer driving season,'" said Victor Shum, energy analyst at Purvin & Gertz in Singapore.
The jump in oil prices highlighted just how jittery the market has grown about any hint of a disruption to refinery operations, with global demand strong and the supply cushion thin.
"The surplus production capacity within OPEC remains limited, giving rise to concerns that supply may have a difficult time catching up with demand -- that has always been the main issue behind the surge in oil prices," Shum said.
Gasoline futures fell 0.42 cent to $2.1652 a gallon while heating oil prices rose 0.64 cent to $2.0711 a gallon. Natural gas lost 2.6 cents to $6.874 per 1,000 cubic feet.
More militant violence in Nigeria, where on Wednesday a gunman riding a motorcycle shot to death a man working for the Houston-based drilling services company Baker Hughes Inc., also heightened supply worries.
Attacks on oil installations by the militant Movement for the Emancipation of the Niger Delta have cut more than 20 percent of Nigeria's 2.5 million barrels-a-day of production.
The group said it was not responsible for the slaying in an e-mail to The Associated Press Wednesday although on Tuesday it said it would target oil workers with fresh attacks.
Concerns about Iran, a major oil exporter, also continued to support prices. The country's hard-line president on Wednesday dismissed Western concerns over its nuclear program as "a big lie," even as other voices in the regime appeared to suggest that international cooperation was possible.
The comments by Iranian President Mahmoud Ahmadinejad came a day after key U.N. Security Council members agreed to present Tehran with a choice of incentives -- including energy security and civilian nuclear power -- or sanctions in deciding whether to suspend its uranium enrichment program. The move delays a U.S.-backed draft U.N. resolution that could lead to sanctions, or even possible military action, if Iran does not suspend enrichment.
