Sam Fletcher
Senior Writer
HOUSTON, Apr. 16 -- Crude, heating oil, and gasoline chalked up record high prices on futures markets Apr. 15 after Mexico shut three Gulf of Mexico oil export terminals Apr. 13-14 because of bad weather.
Two of those ports were reopened Apr. 15, officials said. Mexico is the third largest supplier of crude to the US, exporting 1.2 million b/d (OGJ Online, Apr. 15, 2008).
"The US dollar that has hit all-time lows against the euro, robust diesel demand from China…, and supply concerns have driven oil prices to increase over 18% since the beginning of the year," said analysts in the Houston office of Raymond James & Associates Inc. Despite requests by the US and the UK that members of the Organization of Petroleum Exporting Countries increase oil production, the analysts said, "Like a broken record, OPEC continues to reiterate their belief that current supplies are adequate."
However, Olivier Jakob at Petromatrix, Zug, Switzerland, said, "West Texas Intermediate had been running a very tight correlation to the dollar for the past few weeks, and [on Apr. 15] for the second day in a row it managed to decouple itself from that relationship. The euro continued to be stuck below the $1.59 resistance, but crude oil is advancing now independently towards the macro target of $115/bbl. While the weak dollar has been responsible for the rising trend of oil prices, it was not directly responsible for the advance of crude oil so far this week."
The heating oil futures contract on the New York market was under technical pressure last week. But it now has "found renewed support, and the product cracks managed to be preserved in the crude oil rally," said Jakob.
US inventory
Wall Street analysts were anticipating a 1.8 million bbl increase in commercial US crude inventories. Instead, the Energy Information Administration reported Apr. 16 that crude stocks fell 2.3 million bbl to 313.7 million bbl in the week ended Apr. 11. US gasoline stocks for the same period plunged 5.5 million bbl to 215.8 million bbl, much more than the 1.5 million bbl decline that Wall Street had expected. Distillate fuel inventories inched up 100,000 bbl to 106.1 million bbl, vs. Wall Street's consensus for a 1.5 million bbl drop. Propane and propylene inventories increased 100,000 bbl to 25.4 million bbl.
Imports of crude into the US dipped by 33,000 b/d to 8.9 million b/d during the same week. Input of crude into US refineries was down 113,000 b/d to 14.2 million b/d, with refineries operating at 81.4% of capacity. Gasoline production was reduced to 8.8 million b/d, while distillate fuel production increased slightly to 4 million b/d during the week.
Jacques H. Rousseau, an analyst at Soleil-Back Bay Research, said total refined product inventories—including gasoline, distillate, and jet fuel—declined more than 4 million bbl (1.1%) during the week, due primary to lower supply. "Additionally, for the first time this year, demand growth is in positive territory over the past 4 weeks vs. year-ago levels. We expect this trend of lower supply and seasonally improving demand to continue in the coming weeks, but we remain concerned that high retail gasoline prices will slow consumption growth during the summer driving season," Rousseau said.
Refinery outages
In additional to planned maintenance and the seasonal turnaround efforts at several refineries, several have experienced unexpected disruptions of production.
BP PLC began Apr. 14 the process of restarting an alkylation unit at its 460,000 b/d Texas City, Tex., refinery. Just a day earlier, ExxonMobil Corp. began the restart process of a CO boiler at fluid catalytic cracking unit No. 3 at its 53,000 b/d Baytown, Tex., refinery.
An Apr. 10 fire at an electrical substation at Marathon Oil's 239,000 b/d refinery in Catlettsburg, Ky., forced the closure of the FCCU. That same day a fire at an associated compressor at BP's 260,000 b/d Carson, Calif., shut down a hydrocracker.
Sunoco Inc.'s 194,000 b/d Marcus Hook, Pa., refinery was in restart mode Apr. 9 following an Apr. 7 power failure, according to a report by Dow Jones Newswires, compiled from both official and unofficial sources. Valero Energy Corp.'s 255,000 b/d Aruba refinery is expected to operate at a reduced rate through April, pending completion of repairs to crude vacuum unit, following a fire on Jan. 25. Coker repairs began in late March at Valero's 210,000 b/d Delaware refinery and are expected to continue through early May.
At Lyondell Chemical Co.'s 268,000 b/d refinery in Houston, an FCCU was shut down Mar. 19 due to a compressor failure and is expected to restart in April. A 20,000 b/d FCC unit was shut in at Valero's 340,000 b/d Corpus Christi refinery. The company's 325,000 Port Arthur refinery is operating at 260,000-270,000 b/d during repairs to drum cracks on a coking unit.
A 43,000 b/d hydrocracker was shut down Apr. 12 at BP's 360,000 b/d Carson, Calif., refinery following a fire at an associated compressor. Exxon restarted a hydrotreater that was idled Apr. 4 due to a fire at its 152,500 b/d Torrance, Calif., refinery. A 36,000 b/d hydrocracker was shut in Apr. 2 to repair a heat exchanger at Valero's 165,000 b/d Benecia, Calif., refinery.
Energy prices
The May contract for benchmark US light, sweet crudes hit a record high price for intraday trading at $114.08/bbl before registering a record closing price of $113.79/bbl, up $2.03 Apr. 15 on the New York Mercantile Exchange. The June contract gained $2.05 to $113.22/bbl. On the US spot market, WTI at Cushing, Okla., was up $2.03 to $113.79/bbl. Heating oil for May delivery climbed 7.1¢ to a record $3.27/gal on NYMEX. The May contract for reformulated blend stock for oxygenate blending (RBOB) pegged an intraday high of $2.89/gal before closing at $2.88/gal.
The May natural gas contract bumped up 15.2¢ to $10.21/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 13¢ to $10.14/MMbtu.
In London, the May IPE contract for North Sea Brent crude registered an intraday record of $112.08/bbl prior to a record closing at $111.31/bbl, up $1.47 for the day. The May gas oil contract escalated $22 to $1,039.75/tonne.
The average price for OPEC's basket of 13 reference crudes advanced $1.71 to $105.73/bbl for a second new record in as many days.
Contact Sam Fletcher at [email protected].
