MARKET WATCHPDVSA refinery mishap triggers jump in gasoline prices

Sam Fletcher
Senior Writer
HOUSTON, Oct. 21 -- Unleaded gasoline for November delivery jumped by 0.93¢ to 85.87¢/gal Monday on the New York Mercantile Exchange, following reports of an explosion Sunday in the Amuay refinery at Petróleos de Venezuela SA's 950,000 b/d Paraguana refining complex (CRP) in Venezuela.
That complex is PDVSA´s major supplier of gasoline to the US. PDVSA officials planned to ship 6 million bbl of reformulated gasoline (RFG) to the US from that facility in October-December, representing a 7% increase in CRP's RFG exports over the same period last year (OGJ Online, Sept. 25, 2003).

Supply shortage feared
Reports of the explosion¿even before confirmed¿stimulated fears of a possible supply shortage among traders that sent November gasoline futures prices as high as 86.5¢/gal during Monday's session, following a loss Friday of 2.65¢/gal. The December gasoline contract increased by 0.19¢ to close at 82.79¢/gal Monday on NYMEX.
The Caracas-based online news service Petroleumworld.com, published on the internet, reported Tuesday that PDVSA officials denied the explosion had any effect on refinery operations. However, it also quoted a trader as saying the market moved "on its instincts" because of PDVSA's lack of credibility following the general strike and consequent mass layoffs among its experienced workers earlier this year.
PDVSA's refinery operations have been plagued with mishaps since the December 2002-February 2003 general strike, aimed at ousting Venezuelan President Hugo Chávez, and the subsequent reorganization of the state oil company. Initially, military personnel and inexperienced workers were brought in to reactivate PDVSA refineries. Earlier this year, it took workers some weeks to repair damage from a fire in a 84,000 b/d hydrodesulfurization unit of the Amuay refinery (OGJ Online, Apr. 28, 2003).

Other energy prices fall
Meanwhile, other energy futures prices continued to fall Monday, following reports last week of increased US inventories of oil and natural gas.
The November natural gas contract plummeted 26.5¢ to $4.77/Mcf on NYMEX, "led by falling cash prices, mild weather forecasts, and increasing confidence that storage will meet winter heating needs," said analysts Tuesday at Enerfax Daily.
"The market has lost about 90¢[/Mcf], or about 16%, in the last six sessions in soft shoulder-month demand and a lagging cash market, after jumping 19% 2 weeks ago on expectations for a cold winter," the analysts said. "Cash prices also fell yesterday and still lag behind the November futures contract by about 48¢[/Mcf], as rising pressure in storage caverns near capacity ahead of winter has backed more volumes [of natural gas] onto the market."
They said, "The steeply discounted cash market continues to be the main factor driving prices lower."
The November contract for benchmark US sweet, light crudes lost 33¢ to $30.35/bbl Monday on NYMEX, while the December position was down by 27¢ to $30.43/bbl. Those losses likely were limited by concerns over the PDVSA refinery mishap, analysts said. On the spot cash market, West Texas Intermediate at Cushing lost 30¢ to $30.38/bbl Monday.
Heating oil for November delivery declined by 0.8¢ to 82.34¢/gal on NYMEX.
In London, the November contract for North Sea Brent oil was down by 41¢ to $28.62/bbl Monday on the International Petroleum Exchange. However, the November natural gas contract jumped by 18.4¢ to the equivalent of $4.49/Mcf. Gas oil for the same month gained $3.75 to $250/tonne on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 49¢ to $28.40/bbl Monday.

Contact Sam Fletcher at [email protected]