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Oil futures prices fall, gasoline rises after more refinery outages over the weekend

Oil futures prices fall, gasoline rises after more refinery outages over the weekend

Oil prices fell Monday and gasoline prices rose after another series of refinery problems were reported over the weekend.
Traders are concerned about a glut of oil building up in the supply chain for refineries, and about a shortage of gasoline being produced by the facilities.
Light, sweet crude for June delivery fell 52 cents to $65.94 a barrel in midday trading on the New York Mercantile Exchange. Crude surged above $66 a barrel late Friday after Saudi Arabia announced the arrests of 172 Islamic militants, some of whom allegedly planned to attack oil fields.
Brent crude for June delivery dropped 59 cents to $67.82 a barrel on London's ICE Futures exchange.
Gasoline futures, on the other hand, rose 3.87 cents to $2.40 a gallon.
"It's basically talk of refinery outages" that is moving gasoline prices higher Monday, said Antoine Halff, an analyst with Fimat.
Recent problems include a fire and explosion on Friday that temporarily shuttered Gary Williams Energy Corp.'s 50,000 barrel-per-day refinery in Wynnewood, Oklahoma, and the shutdown on Saturday of portions of ConocoPhillips' 247,000 barrel-per-day refinery in Sweeny, Texas, due to power outages, wrote Man Energy analyst Edward Meir in a research note.
Halff said there are few regulations requiring refiners to report outages. Traders suspect there could be more problems refiners aren't announcing.
"It's a bunch (of problems)," Halff said. "It undermines demand for crude."
The refinery problems put more pressure on U.S. gasoline inventories, which have fallen for 11 weeks in a row. Last week's U.S. Energy Department report showed an unexpected drop of 2.8 million barrels in U.S. gasoline stockpiles and said U.S. refinery use declined to 87.8 percent of capacity.
With the start of the summer driving season about a month away, some analysts wonder whether gasoline supplies will be adequate to meet demand.
Halff attributed part of Monday's crude oil price decline to profit-taking from Friday's big rally.
Olivier Jakob of the Petromatrix consultancy in Switzerland said the arrests didn't immediately justify a price hike.
"The threat to Saudi oil is a constant underlying one and we do not read yet a new imminent risk," he said Monday.
Halff agrees, noting that traders realized after running prices up on news of the arrests that production had not actually been disrupted.
Traders are also watching events in Nigeria and Iran _ 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," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "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 that securing the oil-rich Niger delta is 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.
In other Nymex trading Monday, heating oil futures dipped less than a penny to $1.904 a gallon, while natural gas prices fell 3.6 cents to $7.795 per 1,000 cubic feet.


Updated : 2021-01-23 07:02 GMT+08:00