Sam Fletcher
Senior Writer
HOUSTON, Aug. 29 -- Gasoline futures prices rebounded Thursday on the New York Mercantile Exchange, with reports of refinery problems just prior to an expected surge in demand over the 3-day Labor Day weekend that begins Saturday, marking the end of the US summer driving season.
There were reports of problems with a 65,000 b/d fluid catalytic cracker at ChevronTexaco Corp.'s 225,000 b/d refinery in Richmond, Calif. Officials said it could take at least 2 days to return that unit to full service.
Rumors of a fire at Valero Energy Corp.'s 210,000 b/d Texas City, Tex., refinery sparked a jump in gasoline futures prices in early trading on NYMEX. However, company officials quickly denied those reports, noting there was a fire-and-safety drill Thursday at Valero's 140,000 b/d refinery in Corpus Christi, Tex.
Valero also reported Thursday that, after 7 weeks, workers reactivated a 36,000 b/d hydrocracker at its 148,000 b/d Benicia, Calif., refinery. That unit was taken out of service July 9 for 2 weeks and was taken down again July 24 after a failed restart.
NYMEX prices
Unleaded gasoline for September delivery regained 2.07¢ to $1.05/gal Thursday on NYMEX after losing a total of 8.56¢/gal over the last two trading sessions from a 5 ½-month high of $1.12/gal at the start of this week.
The September gasoline contract expires at the end of NYMEX shortened trading session Friday. The market will be closed Monday for Labor Day.
Heating oil for September delivery increased by 0.21¢ to 80.88¢/gal Thursday on NYMEX.
The October contract for benchmark US light, sweet crudes rose by 29¢ to $31.50/bbl, while the November position advanced by 32¢ to $31.25/bbl. On the cash spot market, benchmark US oil was up 30¢ to $31.53 FOB.
The oil market was stimulated Thursday by reports of an explosion on a pipeline in northern Iraq that feeds into the main export pipeline from that country's northern oil fields to an export terminal in Turkey.
The new near-month October contract for natural gas gained 6.1¢ to $4.94/Mcf on NYMEX after the US Energy Information Administration reported early Thursday that natural gas injections into US underground storage fell to 53 bcf during the week ended Aug. 22. That was down from injections of 78 bcf the previous week and 59 bcf during the same period in 2002, marking "the first time in a long time" that the 2003 weekly injection rate has fallen below year-ago levels, said analysts Friday at Enerfax Daily.
"Many blamed the bullish EIA data on the big Aug. 14 (electrical power) blackout, which downed nine nuclear units in the Midwest and Northeast, pushing up natural gas demand as utilities replaced the lost nuclear power with gas-fired generation," Enerfax analysts said.
US natural gas storage now totals 2.3 tcf, about 15% below year-ago levels and 7% under the 5-year average. "To get to 3 tcf in storage by November, average weekly builds of 68 bcf are needed," Enerfax reported.
Other energy prices
In London, the October contract for North Sea Brent oil increased by 26¢ to $29.44/bbl Thursday on the International Petroleum Exchange. However, the September natural gas contract fell by 6.1¢ to the equivalent of $2.16/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes inched up by 3¢ to $28.80/bbl Thursday. That basket price has remained above OPEC's target of $22-28/bbl for 19 of the last 20 trading days.
OPEC's price band mechanism calls for members to adjust production quotas up or down by 500,000 b/d for each $1/bbl that the basket price remains above or below the group's targeted price level for 20 consecutive trading days.
However, on Aug. 19, OPEC's basket price dropped to $27.94/bbl Tuesday, back within the group's targeted range for the first time since July 31. Although it rebounded above $28/bbl the next day, the 1-day price decline restarted the countdown for possible OPEC action.
Contact Sam Fletcher at [email protected]
