Sun, Jul 20, 2003 - Page 10 News List

Glitch in Louisiana adds to shortage, leaving oil higher

REUTERS AND AP , NEW YORK AND MEXICO CITY

Oil prices rose Friday for the second straight session on buying ahead of the week-end, as tight US crude inventories kept dealers nervous about supply.

US benchmark crude futures were up US$0.55, about 1.8 percent, at US$31.96 per barrel, while benchmark Brent followed, posting a US$0.31 gain to US$28.93 a barrel.

The rise was caused by traders buying to keep from being caught in short positions over the weekend, a production glitch in Louisiana, the resolution of a labor dispute in Mexico and generally low crude oil supplies, traders and analysts said.

Prices are up around US$0.65 on the week as the price rally Thursday and Friday made up for losses sustained Wednesday, when US oil industry inventory data showed a big build in the supply of gasoline, the key summertime oil product.

Tight supplies

Tight US supplies, with US crude stocks 11 percent less than a year ago, are putting a floor under prices.

Also, a gasoline-making unit will shut Monday at the Marathon Ashland LLC refinery northwest of New Orleans, a company source said.

The two-week outage comes at a time of summertime demand for gasoline.

Gasoline futures on the New York Mercantile Exchange rose US$0.0306 or 3.4 percent to US$0.9213 per gallon.

Still, gasoline futures fell more than a cent on the week, because of the large gasoline supply build reported by the US Energy Information Administration on Wednesday.

OPEC meeting

The OPEC cartel will meet July 31. It is expected to maintain crude production quotas.

Slightly diminished production this week from the Gulf of Mexico caused by precautionary rig evacuations during Hurricane Claudette also underpinned crude by spurring some supply worries among futures traders on the NYMEX and the International Petroleum Exchange in London.

And Atlantic crossings may be more difficult this week as Tropical Storm Danny makes for rough seas even though it is not expected to hit land, the US National Hurricane Center said.

Mexican resolution

Meanwhile, Mexico's nationally owned oil monopoly and its oil workers' union signed an agreement Friday to increase salaries 4.3 percent, ending negotiations 14 days ahead of a contract deadline.

Last year, labor contract negotiations at Pemex dragged on for months, as threats of a strike tampered with Mexican markets and raised concern in the US.

The labor contract signed Friday by Pemex general director Raul Munoz and oil workers' union leader Carlos Romero Deschamps goes into effect Aug. 1 and also contains "diverse benefit increases," according to a written statement by Pemex.

The news release did not describe the benefits in detail.

This story has been viewed 3097 times.
TOP top