LONDON, 23 April 2005 — World oil prices rose yesterday on concern that there might be a shortage of gasoline during the northern hemisphere summer amid refinery problems in the United States, dealers said. New York’s main contract, light sweet crude for delivery in June, gained 78 cents to $54.98 per barrel in early deals.
In London, the price of Brent North Sea crude oil for delivery in June added $1.23 to $54.60 per barrel.
Oil prices rallied yesterday, after dipping the previous day, on news of technical problems at a refinery in the southern US state of Lousiana. “The rise in gasoline (prices) was linked to talk of a restart failure at the 53,000 barrels-per-day gasoline-making fluid catalytic cracker at the ConocoPhillips” refinery, analysts at the Sucden brokerage firm said.
The facility, owned by US oil group ConocoPhillips, is located at Lake Charles in Louisiana and has a total output of 255,000 barrels per day.
“The ConocoPhillips incident is really a fairly routine occurrence,” said Tim Evans, a senior market analyst at IFR Markets in the United States.
“Sometimes units start smoothly following maintenance and sometimes they don’t,” he said in reference to the traditional maintenance period during February and March.
The incident followed similar production problems at other oil refineries this week.
Rumors surfaced on Tuesday of problems at the Coffeyville Kansas refinery, which produces 90,000 barrels per day (bpd), while another refinery in California also experienced problems.
Valero Energy said last weekend it had shut down the coker processing unit at its St. Charles refinery, also in Louisiana, for 10 to 14 days to conduct unscheduled maintenance, resulting in a production loss of 8,000 bpd of gasoline and 25,000 bpd of distillate fuels.
“The problem now is that utilization is very high and there is limited capacity in case supply gets interrupted in some way,” said Daniel Hynes, an energy analyst with ANZ bank in Melbourne.
Meanwhile, traders were still digesting the week’s weekly snapshot of US crude inventories.
The US Department of Energy’s (DoE) data, which indicated a fall in gasoline stockpiles over the week, also contributed to the latest price hike, dealers said.
The DoE reported on Wednesday that gasoline stockpiles had fallen 1.5 million barrels to 211.6 million over the week, a possible worry ahead of the so-called US driving season, when many Americans take to the roads on holidays.
“The (gasoline) stocks probably stopped prices from pushing up further. If they were a bit lower, I would expect prices to be way above present levels,” Hynes added.