MARKET WATCHRefinery problems boost energy futures prices

After falling sharply last week, energy futures prices soared Monday with reports of problems, including two fires, at three refineries in California, Illinois, and Indiana.

Feb. 3, 2004

2 min read

Sam Fletcher
Senior Writer

HOUSTON, Feb. 3 -- After falling sharply last week, energy futures prices soared Monday with reports of problems, including two fires, at three refineries in California, Illinois, and Indiana.

On Sunday, a brief fire shut down a crude unit at BP PLC's 410,000 b/d refinery in Whiting, Ind., while another fire forced the closure of a hydrotreating unit at ConocoPhillips' 286,400 b/d Wood River refinery in Roxana, Ill. A coker unit at ChevronTexaco Corp.'s 260,000 b/d refinery in El Segundo, Calif., was taken down late Friday, according to news reports.

Reports of those problems at a time when refineries start switching their seasonal production from heating oil to gasoline triggered concerns about low inventory levels in previously complacent markets.

Prices jump
Gasoline for March delivery jumped by 5.04¢ to $1.017/gal Monday on the New York Mercantile Exchange, pulling up other energy commodities. Heating oil for the same month rose by 2.92¢ to 94.48¢/gal.

The March contract for benchmark US sweet, light crudes shot up by $1.93 to $34.98/bbl Monday on NYMEX. That was the biggest 1-day price gain for a crude futures contract since Oct. 12, 2000, when prices escalated in the wake of the attack on the USS Cole, said Dow Jones Newswire. The April crude contract gained $1.38 to $33.48/bbl on NYMEX.

On the US spot market Monday, West Texas Intermediate at Cushing, Okla., jumped by $1.83 to $34.98/bbl.

The March natural gas contract rebounded by 17.7¢ to $5.57/Mcf Monday on NYMEX, recouping most of Friday's loss of 26.2¢/Mcf "despite a softer [US spot] market and moderate Northeast weather this week," said analysts Tuesday at Enerfax Daily. The NYMEX natural gas futures market Monday was "driven by a surging crude oil market and some technical buying after last week's 11% [price] slide," they said.

In London, the March contract for North Sea Brent oil jumped by $1.05 to $30.23/bbl Monday on the International Petroleum Exchange. However, gas oil for February delivery dipped by $2.25 to $256.25/tonne. The March natural gas contract also declined on IPE, slipping by 1.5¢ to the equivalent of $3.98/Mcf.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 38¢ Monday to $29.06/bbl. OPEC's basket price averaged $29.82/bbl last week, down from an average $30.67/bbl during the previous week.

So far this year, OPEC's basket price has averaged $30.33/bbl, up from averages of $28.10/bbl in 2003 and $24.36/bbl in 2002.

Contact Sam Fletcher at [email protected]