[Excerpt: Increasing fuel use and refinery maintenance have cut U.S. gasoline supplies during the last four weeks. Oil surged yesterday after Goldman Sachs Group Inc. analysts predicted that oil could touch $105 a barrel. Petroleos de Venezuela SA said yesterday that it would shut the world's biggest refinery for as much as a week.]
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aPA1rmG3f200&refer=home Crude Oil, Gasoline Surge to Records as U.S. Fuel Supplies Fall Last Updated: April 1, 2005 15:57 EST April 1 (Bloomberg) -- Crude oil and gasoline surged to all- time highs on speculation that rising demand may outpace U.S. refinery production this summer and strain global oil supplies. Increasing fuel use and refinery maintenance have cut U.S. gasoline supplies during the last four weeks. Oil surged yesterday after Goldman Sachs Group Inc. analysts predicted that oil could touch $105 a barrel. Petroleos de Venezuela SA said yesterday that it would shut the world's biggest refinery for as much as a week. ``Prices have been rising because of the overall tightness of the market,'' said Aaron Kildow, a broker at Prudential Financial Derivatives, LLC in New York. ``OPEC has boosted production to meet growing demand, leaving little spare capacity. The Goldman Sachs report and the refinery news from Venezuela have scared traders, adding to the rally.'' Crude oil for May delivery rose $1.87, or 3.4 percent, to $57.27 a barrel on the New York Mercantile Exchange, the highest close since trading began in 1983. Gasoline for May delivery climbed 6.79 cents, or 4.1 percent, to $1.731 a gallon in New York, the highest since the contract was introduced in 1984. Prices touched $1.736 a gallon, an intraday record. New York crude oil touched $57.70 a barrel during the session, surpassing the previous record of $57.60 that was reached on March 17. Retail gasoline prices have gained as refiners pass on their higher costs. Pump prices for regular grade gasoline, averaged nationwide, rose 0.5 cent to a record $2.164 a gallon yesterday, according to the AAA, formerly the American Automobile Association. The U.S. used an average of 8.9 million barrels of gasoline a day this year, up 2.2 percent from the same period in 2004, Energy Department data shows. `Gasoline Dominates' ``In March, April and early May gasoline dominates all of the energy markets,'' said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut-based energy consultant. ``The drop in product stocks offset an increase in crude oil inventories.'' The high price would be necessary to ``meaningfully reduce energy consumption and recreate a spare capacity cushion,'' according to the report dated March 30 from Goldman Sachs analysts led by Arjun Murti. ``The Goldman Sachs report continues to resonate in the energy markets,'' said Jim Steel, director of commodity research at Refco Inc. in New York. ``There is a concern that gasoline supplies will be insufficient to meet demand. Refinery margins are extraordinarily high so I think they will raise gasoline production in coming weeks.'' `Extraordinarily High' Refiners may boost fuel output in April and May to take advantage of high profit margins, analysts said. The profit from making a barrel of crude oil into gasoline and heating oil rose to $14.252, the highest since at least 1989, and up 85 percent from a year ago. The profit margin is based on the price of futures traded on the New York Mercantile Exchange. ``Any refinery outage will drive prices higher,'' said Phil Flynn, vice president of risk management with Alaron Trading Corp. in Chicago. ``The news of the Venezuelan refinery closure yesterday is pushing us higher. Refinery capacity constraints have been a major cause of the rally this year.'' Petroleos de Venezuela, South America's largest oil company, said its Amuay refinery will be shut for as long as a week because of an electrical failure yesterday. Amuay is part of the Paraguana refining complex, with production capacity of 935,000 barrels a day. The complex currently processes about 760,000 barrels a day. Venezuela was the third biggest source of U.S. gasoline imports in 2003, according to the Energy Department. Cut Demand Members of the Organization for Economic Cooperation and Development should be ``better prepared'' to cut fuel demand and use emergency crude stockpiles in case of supply disruptions, Pierre Nesevre, a spokesman for the International Energy Agency, said today. The 30 members of the OECD consume 60 percent of the world's oil. ``We have refinery and production constraints,'' said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. ``This is a very overheated system that's running full out. When there is a disruption there is no one who can offset the loss.'' The IEA, which advises 26 oil-consuming nations on energy policy, is preparing a report for its ministerial meeting, planned at the end of April, with a set of measures that may help lower demand for oil, Nesevre said. The study will recommend transport measures to encourage speed limits and car-pooling to reduce traffic and cut demand for fuel, he said. Rising Consumption The agency forecast in a report last month that oil consumption will climb by 1.81 million barrels, or 2.2 percent, to 84.3 million barrels a day this year. It was 330,000 barrels more than the agency forecast in February. Prices rose in 1974 after an oil embargo that followed the Arab-Israeli war and from 1979 through 1981 after Iran cut oil exports. The average cost of oil used by U.S. refiners was $35.24 a barrel in 1981, according to the Energy Department, or $75.71 in today's dollars. Investment in oil infrastructure fell with prices in the 1980s and 90s. Oil in New York reached a low of $10.35 a barrel in 1998. ``There has been little investment since the mid-80s,'' Emerson said. ``We will have to muddle through for the next few years with price spikes.'' In London, the May Brent crude-oil futures contract rose $2.22, or 4.1 percent, to close at $56.51 a barrel on the International Petroleum Exchange, the highest since the contract was introduced in 1988. Prices touched $56.60, a record intraday price. To contact the reporter on this story: Mark Shenk in New York at [EMAIL PROTECTED] To contact the editor responsible for this story: Robert Dieterich at [EMAIL PROTECTED] ------------------------ Yahoo! Groups Sponsor --------------------~--> Give underprivileged students the materials they need to learn. 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