Market watch: Refinery shutdown boosts energy futures prices

July 12, 2002
Gasoline led a modest increase in New York energy futures prices Thursday, after Phillips temporarily closed its 77,000 b/d Rodeo, Calif., refinery near San Francisco late Wednesday.

By OGJ editors

HOUSTON, July 12 -- Gasoline led a modest increase in New York energy futures prices Thursday, after Phillips Petroleum Co. closed its 77,000 b/d Rodeo, Calif., refinery near San Francisco when plant boilers went out of service late Wednesday.

Company officials said the boilers were again operational Thursday and that workers began a controlled restart, which is expected to be completed in 4-5 days.

Gasoline futures prices on the New York Mercantile Exchange also increased Tuesday on reports of the shutdown of a New Jersey refinery (OGJ Online, July 10, 2002).

Meanwhile, Valero Energy Corp. reported a hydrogen unit at its 135,000 b/d Benicia refinery near San Francisco returned to service over the weekend after being out of operation for 4 weeks. That outage had reduced the plant's gasoline production by 30,000 b/d, officials said.

Valero said last week all of its refineries were still operating at reduced rates because of high distillate inventories. Company officials planned a 17% reduction in crude rates, based on total capacity, during July in all regions except the West Coast. That would result in reductions of 63,300 b/d in gasoline production and 111,700 b/d in distillate production, officials said.

The August contract for unleaded gasoline gained 0.84¢ to 79.83¢/gal Thursday on the New York Mercantile Exchange.

The August position for benchmark US light, sweet crudes inched up 6¢ to 26.83/bbl, while the September contract added 8¢ to $26.84/bbl.

Heating oil for August delivery gained 0.34¢ to 69.01¢/gal. But natural gas for the same month dipped by 3.4¢ to $2.83/Mcf.

The US Energy Information Administration on Thursday reported that 67 bcf of natural gas was injected into US underground storage last week, down slightly from a revised 68-bcf injection the previous week and 106 bcf during the same period a year ago. Citing resubmission of respondent information, the EIA also revised previous weekly injection and storage data since March 15, adding a cumulative 26 bcf to total gas storage levels.

There is now 2.35 tcf of gas in US underground storage, equating to surpluses of 379 bcf year-over-year and 376 bcf above the 5-year average, said Robert S. Morris at Salomon Smith Barney Inc.

Despite recent sizzling temperatures, Morris said Friday that demand for natural gas is not expected to get much of a boost from weather through the rest of this summer. Moreover, he said, "Some regional natural gas price differentials widened substantially during the second quarter. If this expansion persists, it could lead to measurable production shutins in these regions during the second quarter."

In London, both the August and September contracts for North Sea Brent rose 3¢ Thursday to $25.96/bbl and $25.63/bbl, respectively, on the International Petroleum Exchange. Natural gas for August delivery dipped 3.3¢ to the equivalent of $2.28/Mcf on the IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 22¢ to $25.16/bbl.