Sam Fletcher
Senior Writer
HOUSTON, Mar. 15 -- Energy prices continued to escalate Mar. 14 after Amerada Hess Corp. said it shut down for unexpected repair a gasoline-producing unit at the 150,000 b/d St. Croix refinery it owns with Petroleos de Venezuela SA.
The company said the unit may be down for 2 weeks. "The market is focusing on gasoline as the recent 2-day spike in oil [prices] is most likely related to growing concerns over refinery maintenance and the environmental phaseout of methyl tertiary butyl ether in motor gasoline. Both issues are bullish for gasoline prices, especially headed into the summer driving season, and ultimately crude prices are along for the ride," said J. Marshall Adkins in the Houston office of Raymond James & Associates Inc.
US inventories
Traders also bid up prices in anticipation of another decline of gasoline in the pending weekly inventories report. The Energy Information Administration reported Mar. 15 that US gasoline inventories dropped 900,000 bbl to 223.9 million bbl in the week ended Mar. 10.
During the same period, commercial US crude inventories jumped by 4.8 million bbl to 339.9 million bbl, the highest level since May 1999. Distillate fuel stocks fell by 3.9 million bbl to 127.5 million bbl, with a large decrease in heating oil combined with a smaller decline in diesel fuel. US imports of crude fell by 205,000 b/d to 9.9 million b/d in the same week. Input of crude into US refineries increased by 313,000 b/d to 14.4 million b/d, with units operating at 85.7% of capacity, EIA said.
In a separate report, the American Petroleum Institute said US refinery utilization during February was 87.1%, the lowest level for that month since 2002, with product inventories falling as production slowed. "However, major product inventories nevertheless remained more than adequate. Gasoline inventories, for example, ended the month at 2.4% above, and distillate inventories, 14% above the 5-year average," API said.
"Two [storm-damaged] refineries remained offline in February, 6 months after the first of two hurricanes slammed into the Gulf Coast," the association noted. "Additionally, one refinery in Louisiana which was closed since Katrina hit and began its restart process in January has not yet returned to full operation. These three refineries represent roughly 5% of domestic refining capacity."
With the exception of the period immediately following hurricanes Katrina and Rita last year, US refinery inputs were at their lowest monthly level since February 2003. Production levels of most major products in February were down from a year ago, with gasoline production down by 1%.
"Domestic crude oil production shut in by last year's hurricanes continued to return to production in February, with the month's output rising about 1% from January's," said API officials. "However, for the federal offshore Gulf Coast, about 23% of crude oil production and about 14% of natural gas production remains shut in, and Lower 48 crude production for the month was down 5.7% from the same month in 2005. Alaskan production lagged year-ago levels by nearly 10%, reaching its lowest monthly level since September."
Energy prices
The April contract for benchmark US light, sweet crudes climbed by $1.33 to $63.10/bbl Mar. 14 on the New York Mercantile Exchange. The May position escalated by $1.42 to $65.09/bbl. Gasoline for April delivery jumped by 12.27¢ to $1.87/gal on NYMEX. Heating oil for the same month gained 8.34¢ to $1.82/gal. The April natural gas contract advanced by 16¢ to $7.17/MMbtu "on continued short-covering and rising oil prices," said analysts at Enerfax Daily.
In London, the April IPE contract for North Sea Brent crude increased by $1.77 to $63.97/bbl. Gas oil for the same month gained $14 to $557/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased by $1.28 to $57.69/bbl on Mar. 14.
Contact Sam Fletcher at [email protected].
