Oil prices up after US refinery blast
LONDON: Oil prices rose on Thursday as a deadly explosion at a Texas refinery stemmed a selloff triggered by a firmer dollar and rising US crude stocks.
US light crude rose 61 cents to $54.38 a barrel, after falling more than $3.50, or 6 percent, in the previous two sessions. Brent crude oil futures were up 75 cents to $53.79 a barrel. Oil markets will be shut on March 25 for Good Friday.
Prices rose following Wednesday’s blast at a gasoline unit in BP’s Texas City refinery — the third-largest in the United States — in which 14 people were killed.
The explosion damaged an isomerization unit, which upgrades the quality of gasoline, but did not affect other operations at the 470,000 barrel per day (bpd) refinery, BP said.
The blast has spurred fears about whether refiners — already running near full throttle — will meet growing gasoline demand this summer, when summer vacation driving demand peaks. New York gasoline futures surged to a record high of $1.6080 a gallon in early electronic trade, and later traded at $1.5961 a gallon, up 2.12 cents.
“The US has been running refineries at record rates... and we’ve been very lucky we haven’t had a major problem like this earlier,” said Phil Flynn, an analyst at Alaron Trading in Chicago. “It’s a reminder how vulnerable we are.” A deep draw in US gasoline stocks reported by the US government last Wednesday indicates that demand has not been deterred by record prices at the pump, analysts say.
Gasoline inventories fell 4.1 million barrels last week and are down 3 percent over two weeks, although still 7.5 percent above last year’s levels. By contrast US crude oil stocks rose 4.1 million barrels to 309.3 million barrels last week, their highest level since July 2002.
Dollar, crude stocks weigh: Oil prices have fallen from last week’s record peak of $57.60 a barrel, pressured by a rebound in the dollar following the Federal Reserve’s move to increase interest rates this week.
Oil has risen around 25 percent this year as dollar weakness encouraged funds to switch money out of treasury markets and into commodities. Worries over inflation have also emerged as the government said on Wednesday that a big jump in energy costs pushed US consumer prices up 0.4 percent in February.
Treasury Secretary John Snow said on Wednesday he was unhappy with current oil prices but they would not derail the US economy. “They’re not of the sort that... are going to knock us out of the recovery we are in now, but they are certainly unwelcome,” Snow said.
Oil has soared more than $10 since the start of the year and is up over 45 percent from a year ago, with galloping demand from China and the United States stretching global output and refining capacity.
The OPEC looked likely to put a decision on a second 500,000-bpd supply increase on the backburner after prices fell below the group’s $55 threshold. OPEC President Sheikh Ahmad said the time had not come to raise output, although he continued to consult with members one week after an initial 500,000-bpd output increase failed to curb runaway prices. —Reuters