LONDON, 12 May 2006 — Oil climbed above $73 a barrel yesterday, boosted by worries over gasoline supply in the United States as the peak demand summer driving season looms in the world’s top consumer. The climb is part of a broader rally in commodities as money from investment funds flows into the once-disparate group of small, illiquid markets. Copper hit a record high and gold reached a 25-year peak yesterday.
Outages at US oil refineries, including the closure of a unit at Valero Energy Corp.’s Texas City 243,000-bpd plant, pushed prices up, outweighing US government data on Wednesday showing gasoline inventories rose. “The main factor was the problems at Valero’s refinery, which is igniting concerns about gasoline,” said Kevin Norrish of Barclays Capital. “It’s an indication of how sensitive the market is to any news of supply problems right now.”
US crude gained $1.22 to $73.35 a barrel by 1600 GMT, after rising by $1.44 on Wednesday. London Brent crude advanced 99 cents to $73.43 a barrel. Oil in the US is almost 3 percent below last month’s record high of $75.35 because of supply losses in Nigeria, tension over Iran’s nuclear work and more buying of commodities by funds seeking to beat returns of other assets like equities.
Gasoline supplies in the US are a major concern for oil markets ahead of the summer driving season when demand peaks. Valero said on Wednesday a coking unit at the Texas City refinery will shut for a week for work and the outage would cut gasoline output by 15,000 bpd. ConocoPhillips Corp. also cut processing rates at its 263,000-bpd Bayway refinery in New Jersey due to problems with some units.
Oil also climbed as three foreign oil workers, including one Italian, were kidnapped in Nigeria’s oil capital Port Harcourt yesterday, renewing concern about the stability of flows from the world’s eighth largest exporter.
A militant group waging a campaign of attacks on Nigeria’s oil industry said it was not involved in the abduction, which police and industry sources attributed to a community dispute.
Oil’s rally from below $20 a barrel in January 2002 has yet to derail economic growth, suggesting consumers and businesses are living with higher fuel costs.