Oil Rises on Expected Growth
in Demand; Refineries Raise Output
By Eduard Gismatullin
April 17 (Bloomberg) -- Crude
oil climbed in New York on speculation demand for fuel was increasing before
the summer driving season.
U.S. gasoline supplies probably fell the least in 10 weeks as refining
reached a 14-week high, according to a Bloomberg News survey before a weekly
government report tomorrow. Crude also rose after Canada's Enbridge Inc. shut
down part of its pipeline pumping oil to the U.S. Midwest yesterday following a
leak.
``Concerns about the driving season and gasoline inventory levels
clearly are providing some support,'' said Richard Savage, the head of energy
research at Mirabaud Securities Ltd. in London. ``From the refining side, we've
seen difficulties in really adding significant capacity going forward and
that's keeping this market tight.''
Crude oil for May delivery rose as much as 57 cents, or 0.9 percent,
to $64.18 a barrel in after-hours electronic trading on the New York Mercantile
Exchange and was at $64.08 at 12 noon in London. The contract expires at the
end of the week. The more actively traded June contract gained 54 cents to
$66.21 a barrel.
U.S. refiners probably used 88.8 percent of their plant capacity last
week, the highest since the week ended Jan. 5, based on the median estimate
from a Bloomberg News survey of 10 analysts. Operating rates have risen for
four straight weeks.
Crude oil stockpiles probably climbed for a third week, gaining
850,000 barrels, according to the survey. Inventories probably held 333.4
million barrels on April 6, or 5.5 percent more than the five-year average for
the period.
Brent crude oil for June settlement increased as much as 59 cents, or
0.9 percent, to $67.84 a barrel in electronic trading on the ICE Futures
exchange. The contract was last at $67.58 a barrel.
Gasoline Gains
Gasoline for May delivery gained 2.53 cents, or 1.2 percent, to $2.141
a gallon in after-hours trading in New York. Gasoline reached an eight-month
high on April 13, after refinery outages cut U.S. fuel stockpiles.
Gasoline inventories probably declined 1.4 million barrels last week,
according to the survey. They fell 5.5 million barrels in the week ended April
6 and 5 million barrels in the previous week, according to U.S. Department of
Energy data.
Expressed in U.S. dollars, the price of West Texas Intermediate, the
U.S. benchmark crude, has fallen about 9 percent in the last 12 months. Oil has
dropped about 18 percent in euros, 19 percent in British pounds and 8 percent
in yen.
The discount between Brent oil, pumped in the North Sea, and WTI
widened to a record high this month as stockpiles at Cushing, Oklahoma, where
the U.S. crude is priced, rose to near capacity.
``Prices will normalize in three to four months'' when refineries
start taking more crude from Cushing, said Tobias Merath, a commodity
strategist at Credit Suisse Group in Zurich.
Pipeline Shuts Down
Enbridge, the owner of Canada's largest oil pipeline, yesterday shut
down its Line 3 pipeline, which ships oil to U.S. refineries from Edmonton,
Alberta. A leak discovered late yesterday near Glenavon, Saskatchewan, led to
the closing, spokeswoman Jennifer Varey said.
The Calgary-based company is still moving oil into other lines, which
can carry 490,000 barrels a day of oil, from Manitoba for delivery at Superior,
Wisconsin, she said.
The partial shutdown ``could offer a marginal support for WTI crude
prices,'' Mark Bloomfield, a London-based analyst at Citigroup Global Markets
Ltd., wrote today in a report.
Nigerian Production Resumes
Royal Dutch Shell Plc will probably resume oil production from the
western Niger Delta by the end of the month. Nigeria, Africa's largest
producer, has lost about a quarter of its output for more than a year because
of militant attacks. Some analysts expect disruption to continue after
presidential elections on April 21.
Shell's Nigerian venture will open most of the platforms and the
Forcados export terminal, allowing about 500,000 barrels of oil output a day to
resume, said an official at the state-run Nigerian National Petroleum Corp.,
who declined to be identified.
The Organization of Petroleum Exporting Countries, which supplies
about two-fifths of the world's oil, yesterday said a drop in U.S. gasoline
stockpiles was pushing up oil prices and pumping more crude wouldn't help lower
them.
OPEC President and the United Arab Emirates Oil Minister Mohamed
al-Hamli said yesterday world oil markets are ``well- supplied'' and OPEC
``will supply more if the market needs more.''
The 10 OPEC members subject to output targets -- all excluding Iraq
and Angola -- pumped 26.37 million barrels a day last month. Those members have
committed to reducing production by 1.7 million barrels a day to 25.8 million
barrels a day, according to two OPEC agreements made in October and December.
The production cuts had helped trim crude and oil product stockpiles
in the Organization for Economic Co-operation and Development countries by 80.5
million barrels at the end of February from January and 49.6 million barrels
from a year ago, the International Energy Agency said.
``We are going continue to see inventories pull down if OPEC
production stays at the current level,'' Savage said. ``We are looking at a
much tighter market today than we were 12 months ago.''
OPEC's cuts have removed almost 100 million barrels from the market in
the fourth quarter, Ali al-Naimi, Saudi Arabia's oil minister said Jan. 16.
Saudi Arabia is OPEC's largest oil producer.
To contact the reporter on this story: Eduard Gismatullin in London at
[EMAIL PROTECTED]
Last Updated: April 17, 2007 07:38 EDT
---------------------------------
Ahhh...imagining that irresistible "new car" smell?
Check outnew cars at Yahoo! Autos.
