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Concern over U.S. gasoline supply keeps floor under oil prices

Concern over U.S. gasoline supply keeps floor under oil prices

Oil prices fell slightly Monday but were expected to remain firm because of concern about low gasoline inventories in the United States.
Light, sweet crude for June delivery fell 14 cents to US$66.32 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore.
Prices had surged above US$66 a barrel late Friday after Saudi Arabia announced the arrests of 172 Islamic militants, some of whom planned to attack oil fields.
"Early this week the market will likely correct downward with some profit-taking," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "But the market won't fall significantly because it remains underpinned by the concerns of U.S. gasoline supply."
Gasoline inventories have fallen for 11 weeks in a row. Last week's U.S. Energy Department report showed a drop in U.S. gasoline stockpiles of 2.8 million barrels and said U.S. refinery use declined to 87.8 percent of capacity.
Continuing refinery problems _ temporary shutdowns or delayed starts, as well as regular maintenance shutdowns _ are contributing to the supply concerns. With the start of the summer driving season about a month away, some analysts wonder whether gasoline supplies will be adequate to meet demand.
The market is also watching events in Saudi Arabia, Nigeria and Iran _ all key producers where current events have raised concerns about supply disruptions.
"Last week's flawed Nigerian presidential elections continue to add uncertainty to the supply out of Nigeria," Shum said. "And while there are some positive movements on the Iranian front, it is still too early to say how the nuclear issues will be resolved."
In Nigeria, President-elect Umaru Yar'Adua has pledged to make securing the oil-rich Niger delta a major priority of his government. He is set to succeed President Olusegun Obasanjo on May 29 after a vote earlier this month that was marred by violence and widespread charges of rigging.
On Friday, gunmen shot dead two policemen in Nigeria's oil center of Port Harcourt in a failed attempt to kidnap two foreign oil workers. The area has seen an upsurge of armed violence in recent years, most of it the kidnapping for ransom of foreign oil workers.
As for Iran, last week there was a possible improvement in the tense situation, when the country's top nuclear negotiator said talks with a senior European Union official had brought them closer to a united view of how to break a deadlock over a U.N. Security Council demand that Tehran freeze its uranium enrichment program.
In other Nymex trading Monday, heating oil futures rose 0.25 cent to US$1.9160 a gallon, while natural gas prices dropped 0.1 cent to US$7.830 per 1,000 cubic feet.


Updated : 2020-11-30 01:36 GMT+08:00