By OGJ editors
HOUSTON, Nov. 14 -- Crude oil futures for December delivery on the New York Mercantile Exchange approached the $32/bbl mark in trading Thursday, marking their highest level in a month.
Traders said the rally came near the end of the trading session upon news that Shell Oil Products US, a division of Shell Oil Co., plans to close its 65,000 b/d Bakersfield, Calif., refinery by Oct. 1, 2004.
Shell said the California Department of Conservation and the California Energy Commission have reported San Joaquin Valley Heavy Crude (SJV Heavy) in continual decline over the past several years.
"It has been determined that the reduction of SJV Heavy, which serves as the primary supply for Shell's Bakersfield refinery, makes the continued operation of the refinery beyond the third quarter of 2004 no longer economically viable," a news release said.
Shell Oil Products said it will take an after-tax charge to earnings of $200 million in the fourth quarter this year. The charge includes environmental and dismantlement costs.
Energy prices
The December and January contracts for benchmark US light, sweet crudes rose Thursday on NYMEX. The December contract climbed by 57¢ to $31.90/bbl, and the January contract rose by 54¢ to $31.43/bbl.
On the cash spot market, West Texas Intermediate crude at Cushing, Okla., climbed 60¢ to $31.93/bbl Thursday.
Refined petroleum products also closed higher. Unleaded gasoline for December delivery rose 1.49¢ to 86.91¢/gal Thursday on NYMEX. Heating oil for the same month gained 1.76¢ to 84.45¢/gal.
Natural gas for December delivery rose 5.80¢ to $4.80/Mcf Thursday on NYMEX.
Enerfax Daily analysts Friday said that a "slightly bearish weekly inventory report and a softer cash market were offset by short-covering ahead of colder late-week weather."
They called the market "vulnerable" to rallies ahead of early-season cold weather.
In London, the December contract for North Sea Brent oil settled slightly higher at 29.21/bbl, up by 1¢ from the previous close on the International Petroleum Exchange. The day's high was $29.37/bbl and the low $28.95/bbl. The December contract expired at the close of trading Thursday.
Traders said the market's direction was unclear but futures prices seemed fairly stable at slightly above $29/bbl.
Gas oil for November delivery rose $4.50 to $259.50/tonne. The December natural gas contract dipped 60¢ to the equivalent of $4.91/Mcf Thursday on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 31¢ to $28.94/bbl Thursday.
