Sam Fletcher
Senior Writer
HOUSTON, Apr. 29 -- Crude prices hit a new intraday high of $119.93/bbl Apr. 28 on the New York futures market, with strikers at Ineos Group Holdings PLC's 195,700 b/d Grangemouth, Scotland, refinery scheduled to return to work Apr. 29, ending a 2-day strike.
"The unions are back at work at Grangemouth," reported Olivier Jakob at Petromatrix, Zug, Switzerland. The strike forced BP PLC to close a 700,000 b/d North Sea oil pipeline because the refinery provides electricity and steam to the North Sea's Forties Pipeline System that connects with some 70 North Sea oil fields. Production of as much as 3 bcfd of associated natural gas also had to be shut in, officials said (OGJ Online, Apr. 28, 2008).
"With about 4 million bbl of buffer stock at the Forties export terminal, the material impact to crude supplies should be minimal and any [market] premium taken off," said Jakob. However, Ineos officials said it would take 3 weeks to return the refinery to full capacity, while BP officials said it would take 4 days to restore pipeline operations. Grangemouth refinery workers staged the 2-day walkout in a dispute over pensions.
In other news, a workers strike against ExxonMobil Corp. in Nigeria earlier forced that company to shut in some 800,000 b/d and to declare force majeure on disrupted deliveries. That strike "is not yet over but our bias is turning from neutral to a resolution as the parties are to meet again today in Abuja," Jakob said.
Meanwhile, the Movement for the Emancipation of the Niger Delta (MEND) said its fighters hit an oil pipeline Apr. 24 in Nigeria and forced Royal Dutch Shell PLC to shut in another 350,000 b/d of crude production. Shell confirmed an attack on a joint venture pipeline but provided no additional details. As a result, Jakob said, "We would then leave mostly a premium for the amount of disruption caused by the MEND militants on the Nigerian pipelines, and Shell is not being transparent on the amounts involved."
Meanwhile, Jacques H. Rousseau, an analyst at Soleil-Back Bay Research, said, "We believe that increasing supply and weak demand will reduce refining margins and earnings for the refiners in the second quarter. We estimate that the current second quarter 'first call' consensus estimates for the refiners are about 30% too high, on average." Rousseau said Apr. 29, "We expect refined product inventories (gasoline plus distillate plus jet fuel), which have declined 9% over the past 6 weeks (but are still 2% above the 5-year average for this calendar week) to begin rising again in May.
Energy prices
The June contract for benchmark US sweet, light, crudes gained 23¢ to $118.75/bbl Apr. 28 on the New York Mercantile Exchange. The July contract advanced by 29¢ to $117.82/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., fell $2.82 to $118.75/bbl. Heating oil for May delivery dipped by 0.4¢ but remained essentially unchanged at an average daily price of $3.30/gal on NYMEX. The May contract for reformulated blend stock for oxygenate blending (RBOB) lost 2.3¢ to $3.03/gal.
The May natural gas contract escalated by 31.7¢ to $11.28/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 30¢ to $11.04/MMbtu.
In London, the June IPE contract for North Sea Brent crude increased 40¢ to $116.74/bbl. The May gas oil contract lost $2 to $1,083.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 13 reference crudes increased $1.65 to $111.66/bbl on Apr. 28.
Contact Sam Fletcher at [email protected].
