Sun, Apr 24, 2005 - Page 10 News List

Crude oil futures surge past US$55 on supply worries

AP , NEW YORK

Oil prices shot above US$55 a barrel on Friday amid technically triggered buying and supply worries sparked by refinery snags and a terrorist attack in Saudi Arabia.

Light, sweet crude for June delivery jumped US$1.19 to settle at US$55.39 a barrel on the New York Mercantile Exchange.

Gasoline futures climbed US$0.0323 to US$1.653 per gallon, reflecting pre-summer supply worries amid a rash of refinery shutdowns.

In London, Brent crude for June delivery was up 96 cents at US$54.97 per barrel on the International Petroleum Exchange.

"There is a general fear in the market that gasoline supplies will be very tight heading into the summer and glitches at US refineries further exacerbate that issue," said Adam Sieminski, an oil price strategist at Deutsche Bank in London.

Among US refiners believed to have scaled back operations in recent days, independent Valero Energy Corp said on Thursday that it is doing significant work on its refineries in the first two quarters of the year.

Crude run rates at its St. Charles refinery have been reduced to 70,000 barrels a day from 190,000 barrels a day capacity, company officials said. Unplanned maintenance was also performed at the company's Paulsboro, New Jersey plant.

Analysts said the news heightened fears that US refiners may struggle to keep up with summertime demand for gasoline.

"As has been the case for some time now, any refinery problems result in significant price amplification," said John Kilduff, senior vice president at brokerage Fimat USA. "Demand fears that continue to pervade market sentiment are the enabler of these production related surges."

In Saudi Arabia, suspected militants linked to al-Qaeda clashed with security forces on Thursday, prompting fresh fears of a supply disruption from the world's largest exporter. Two extremists and two policemen were killed.

"Worries about refinery glitches combined with renewed terror fears to make traders nervous to carry short positions over the weekend," a broker said, adding that the stock market rebound this week also quelled fears of an economic downturn in the US.

Tom Bentz, a broker and analyst at Paribas Futures, added that the June crude contract's "strong close" above US$54 a barrel on Thursday generated the upside momentum that lifted prices on Friday.

However, he said that prices will likely "struggle from here on up. Only a close above US$56 a barrel turns the picture more bullish for a run at previous all-time highs," Dow Jones Newswires quoted him as saying.

Comments by Saudi Arabia's oil minister Ali Naimi did little to cool the market. In an interview with The Wall Street Journal, he said the kingdom has tossed aside its production cap set by OPEC and is willing to sell its customers every barrel of oil they want, up to its current capacity of 11 million barrels a day.

This story has been viewed 3421 times.
TOP top