MARKET WATCH: Oil prices up after refinery explosion, fire

Sam Fletcher
Senior Writer

HOUSTON, Feb. 19 -- Petroleum prices were reported up in early trading Feb. 19 on the New York market following an explosion and fire Feb. 18 at Dallas-based Alon USA Energy Inc.'s 70,000 b/d sour crude refinery in Big Spring, Tex.

Four workers were injured but no fatalities were reported. Company officials said the refinery likely would be offline for weeks. Alon USA was formed when Alon Israel Oil Co. Ltd.—the largest Israeli-based fuel company—purchased from Total SA about 1,700 FINA retail stations, a refinery, pipelines, and terminals in the US. That included an oil pipeline system of some 500 miles and a product pipeline and terminal network of 7 product pipelines totaling 840 miles and 6 product terminals.

Analysts in the Houston office of Raymond James & Associates Inc. said, "Crude continues to trade higher and is up nearly 2% today after a slight gain [in electronic trading on Feb. 18]. The increased likelihood of the Organization of Petroleum Exporting Countries deciding to cut supplies at its next meeting (Mar. 5) has added to the momentum gained from [Venezuela's] President [Hugo] Chavez's actions last week [in cutting off crude sales to ExxonMobil Corp.].

"Natural gas is up 3% this morning as heating degree days (contributing to this week's withdrawal) were reported at 13% more than the forecast. Despite the unexpectedly cold weather, we still expect prices to fall as the year-over-year storage surplus of 180 bcf is cut to 50-70 bcf in the next 2 weeks alone," Raymond James analysts said.

The floor session was closed Feb. 18 on the New York Mercantile Exchange because of the US President's Day holiday.

The average price for OPEC's basket of 12 reference crudes dropped 35¢ to $91.38/bbl on Feb. 18.

Contact Sam Fletcher at samf@ogjonline.com.

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