Oil Prices Near $56 on Production Worries
Reuters | April 25, 2005
By Mia Shanley
SINGAPORE - Oil prices rose 1 percent on Monday, flirting with $56 a barrel, as production glitches in the United States kept the market edgy about a possible squeeze on gasoline supplies this summer.
U.S. light crude traded up 58 cents to $55.97 a barrel by 0513 GMT, adding to a hefty gain of $1.19, or 2.2 percent, on Friday when the contract ended at $55.39.
London Brent crude was up 62 cents to $55.59 a barrel.
"It started off as a gasoline-led rally. Gasoline pulled back to the break-out level ($1.47) and then exploded off that," said John Brady at ABN AMRO in New York.
Crude oil prices have rallied for five straight sessions, notching up more than $4 as worries about a squeeze on gasoline sparked a flurry of buying, drawing speculative funds back into the market.
The market is within striking distance of the all-time high of $58.28 set at the start of the April.
"It looks like the pull-back is over. We're going to break the highs again. I see it breaking $59 in the next week," a dealer in New York said.
Dealers are increasingly anxious about U.S. gasoline supplies ahead of the summer driving season. A spate of refinery problems has raised fears that plants -- already operating near capacity -- may struggle to sate rising demand.
Gasoline futures were trading up 1.02 cents to $1.6625 a gallon, more than 11 percent above levels one week ago.
Traders said a gasoline-making unit at a ConocoPhillips' refinery in Louisiana would be down for another week after failing to restart following maintenance, compounding other refinery problems in Texas and Kansas.
A heavy surplus of U.S. crude oil and signs of higher OPEC production have done little to calm fears of a gasoline shortfall this summer and a shortage of heating fuel at the end of the year.
Traders said U.S. gasoline inventories, which fell unexpectedly last week, should be on the rise at this time of the year. Still, inventories in the world's biggest consumer are 5 percent higher than a year ago.
Crude stockpiles fell last week, the first decline after a nine-week climb put them at the top end of their five-year range.
On the supply side, oil officials said on Sunday Iraq's northern crude exports could resume in a few days if workers repaired the damage from a new sabotage attack that had delayed oil flows.
The pipeline to Turkey's Ceyhan port handled 800,000 barrels per day of Kirkuk crude before the 2003 U.S.-led invasion of Iraq. It has been mostly idle since then as saboteurs regularly hit oil infrastructure in the north.