HOUSTON, Oct. 28 -- The front-month crude futures price climbed above $61/bbl in the New York market as oil companies began reporting record profits for the latest quarter.
That prompted US Energy Secretary Sam Bodman to claim major integrated companies "have a responsibility to expand refining capacity" in his testimony before the Senate Energy Committee Oct. 27. The committee is examining damage by recent hurricanes to offshore platforms, pipelines, and refineries along the Gulf Coast.
Earlier this week, House Republican leaders urged oil companies to put some of their profits into expanding or building new refineries. Democrats introduced bills that would outlaw fuel price profiteering in times of crisis and would impose another windfall profits tax on the US oil industry.
The US Department of Energy said 991,000 b/d of refining capacity was still shut down Oct. 27 along the Gulf Coast, primarily as a result of Hurricane Katrina in August and Hurricane Rita in September.
"The refining industry has been working around the clock to restore capacity affected by the recent hurricanes along the Gulf Coast. These efforts are part of our ongoing commitment to consumers. We believe that recent calls for more analysis of gasoline market trends will further substantiate this commitment," said Bob Slaughter, president of the National Petrochemical and Refiners Association.
Meanwhile, Shell Oil Co. said many of its gasoline outlets in south Florida remain closed due to power outages in the aftermath of Hurricane Wilma. Shell and Motiva Enterprises LLC, the joint venture between Shell and Saudi Refining Inc., said more stations will be reopened as soon as power is restored.
Shell's Port Everglades Terminal in Fort Lauderdale is using a backup generator to load fuel onto delivery trucks, and additional tanker trucks and drivers have been brought in to increase distribution of gasoline.
The US Minerals Management Service said 27 drilling rigs and 228 production platforms were still evacuated in the Gulf of Mexico as of Oct. 27. More than 1 million b/d of crude production and 5.6 bcfd of natural gas production remained shut-in. Cumulative production lost since Aug. 26 from federal leases in the gulf totaled 70.5 million bbl of crude and 359.2 bcf of natural gas, said MMS.
The Louisiana Office of Conservation said Oct. 27 that 904.2 MMcfd of natural gas production had been restored onshore and in state waters in 38 parishes, representing 40.5% of total production in that area prior to the hurricanes. However, 45.5% of the wells in the region remain shut-in.
The December contract for benchmark US light, sweet crudes climbed by 43¢ to $61.09/bbl Oct. 27 on the New York Mercantile Exchange. The January contract increased by 32¢ to $61.52/bbl. Gasoline for November delivery gained 0.81¢ to $1.59/gal, but heating oil for the same month dipped by 0.22¢ to $1.85/gal.
The November natural gas contract fell by 20.8¢ to $13.83/MMbtu on NYMEX because of a sinking spot gas market and a government report on natural gas storage for this winter, said analysts at Enerfax Daily. The Energy Information Administration said US underground natural gas storage increased to 3.2 tcf during the week ended Oct. 21, 2.8% above the 5-year average inventory level (OGJ Online, Oct. 27, 2005).
In London, the December contract for North Sea Brent crude increased by 27¢ to $59.14 on the International Petroleum Exchange. However, gas oil for November was down by $11.50 to $574.75/tonne.
The average price for the Organization of Petroleum Exporting Countries basket of crudes declined by 62¢ to $53.79/bbl Oct. 27.
Contact Sam Fletcher at [email protected].