Crude oil prices on Friday rose to new highs, climbing past $66 a barrel, as reports of new United States refinery outages rekindled fears that gasoline supplies in the world’s biggest consumer would struggle to meet rising demand.
By mid-afternoon in Singapore, light, sweet crude for September delivery rose to an intraday high of $66,11 a barrel in Asian electronic trading on the New York Mercantile Exchange. It then slipped back to $65,95, up 15 cents.
On Thursday, crude touched the $66-a-barrel mark before settling at $65,80, up 90 cents on the day.
Gasoline rose 1,1 cents to $1,9613 a gallon (3,8 litres) and heating oil rose nearly a cent to $1,908.
In London, September Brent crude futures was trading at $65,73 a barrel, up 35 cents, after hitting a new high of $65,85 a barrel.
Analysts said gasoline demand, currently at its peak in the United States summer driving season, was driving crude’s gains. Last week, US gasoline demand picked up by 1,4% from a year ago, according to government data.
Coupled with new reports of refinery outages this week, traders fear US refiners, already running at near-maximised capacities, are straining to satisfy the rising demand.
”People fear there won’t be enough gasoline at a time when it’s so greatly demanded, so they’re just buying, buying and buying,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Oil prices are almost 50% higher than a year ago, but they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.
The US Energy Department said on Wednesday gasoline inventories fell by 2,1-million barrels to 203,1-million last week.
”The refinery breakdowns are a big issue. They’re happening at a time when gasoline supplies are already very tight,” Emori said.
Among the latest refinery outages: several units at ConocoPhillips’s 306 000-barrel-a-day Wood River, Illinois, refinery were shut after a thunderstorm caused a power failure at the plant.
Also, British Petroleum (BP) shut down a hydrogen recovery unit on August 10 at its massive 470 000-barrel-a-day Texas City refinery, following a decision by the company to keep high-pressure units off line until they can be proven safe, BP spokesperson Scott Dean said on Thursday.
The three other high-pressure units at the refinery — the residual hydrotreater, the ultracracker and the gas oil hydrotreater — were already off line on Wednesday and will be kept down pending investigations, Dean said.
The incidents are the latest in a string of outages to hit about a dozen US refineries that together can process 2,7-million barrels a day of crude oil, about 16% of total US refining capacity.
But some analysts were less certain the recent run-up in prices was entirely based on fears of the impact of refinery snags, which are not out of the ordinary for this time of year, when plants run hard to meet peak gasoline demand.
”Whether refinery outages are the only support for this market remains a mystery, as supply and demand fundamentals appear to be somewhat bearish,” said Energyintel analyst George Orwel in a research note.
Also, analysts said traders were focusing selectively on information that would send prices higher.
Traders appeared to discount a downward revision in oil demand forecast by the International Energy Agency released on Thursday. The group’s monthly report projected that demand would be 150 000 barrels a day less than it expected, as demand from China appeared to show signs of weakening.
Instead, the focus seemed to be on sections of the report that reduced its estimate of output by Russia and other non-members of the Organisation of Petroleum Exporting Countries, analysts said. — Sapa-AP