Crude Futures Edge Up Above $61 a Barrel
Thursday August 4, 6:12 am ET
By Edith Balazs, Associated Press Writer
Crude Futures Edge Up Above $61 a Barrel; Traders Wary Over Supply Problems and Closed Refineries
BUDAPEST, Hungary (AP) -- Oil prices edged up Thursday, despite positive U.S. inventory data, as traders remained wary over possible supply woes because of refinery shutdowns and forecasters predicted a busy hurricane season that could hurt Gulf of Mexico output.
Light, sweet crude for September delivery rose 17 cents to US$61.03 a barrel on the New York Mercantile Exchange.
"Years of underinvestment in the refinery sector have led to a very tightly supplied market, which in return pushed prices to current levels," said Alex Scott, a senior research analyst at Seven Investment Management in London.
"Direct market participants seem to believe that prices are to stay at current levels for years to come and the fact that there's very little evidence to show a slowdown in global demand is broadly supportive of their bullish argument," Scott said.
Prices had soared to a record intraday high of US$62.50 Wednesday before retreating to settle at US$60.86 after the U.S. Department of Energy released its better-than-expected petroleum report, showing an increase in oil inventories for the first time in a month.
The data showed domestic inventories of crude oil and diesel grew, but gasoline stocks fell sharply.
It said there was an increase of 200,000 barrels in the U.S. inventory of crude oil last week, putting the supply at 318 million barrels, or 8 percent above year-ago levels.
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.
Gasoline rose 1 cent to US$1.7800 a gallon (3.8 liters), while heating oil rose marginally to US$1.6900 a gallon.
Brent for September delivery on London's International Petroleum Exchange was up 13 cents at US$59.78 per barrel.
Production suspensions at several key U.S. plants was the catalyst for a price spike last week as analysts said the snags could hurt oil products supply and fail to meet demand in an extremely tight market. At least four plants, including the third-largest refinery in the country, were shut down from late last week either from fires or unscheduled maintenance.
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.
"Gasoline markets have been hit with a rash of unplanned refinery outages in the last couple of weeks," said Energyintel analyst Tom Wallin. "Even with U.S. retail pump prices at record highs, the economy continues to surge ahead and with it gasoline consumption. The extreme price strength clearly seems to be demand-led."
Oil markets have been roiled in recent days over the death of King Fahd in Saudi Arabia, weather patterns that could hurt Gulf of Mexico output down the line and Iran's nuclear ambitions, which could raise tension between OPEC's No. 2 producer and the West.
The U.S. Weather Service has predicted 11 to 14 more tropical storms, including seven to nine more hurricanes, by the end of November.
Associated Press Writer En-Lai Yeoh in Singapore contributed to this report.
Cash is King until further notice!!!
My comments on companies are usually my opinion of long term success (years). The PPS may go up or down greatly in the meantime depending on the number of greedy suckers with money.
