Oil Trades Near $64 in New York on Rising Demand for Gasoline
By Eduard Gismatullin
April 16 (Bloomberg) -- Crude
oil traded near $64 a barrel in New York on expectations of higher gasoline
demand this summer in the U.S, the world's largest energy consumer.
U.S. gasoline supplies were 4 percent below their five-year average,
the Energy Department reported last week. Refineries ran at 88.4 percent of
capacity in the week ended April 6, the highest since Jan. 5, as they ended
maintenance and began making more fuel. With demand for gasoline growing, OPEC
said today in its monthly report, pumping more crude won't bring prices down.
Gasoline ``demand is strong and the refinery situation is not so great
for the driving season,'' said Kenichiro Yamaguchi, the chief operating officer
for Petro Diamond Risk Management Ltd. in London, a unit of Mitsubishi Corp.
Crude oil for May delivery rose as much as 0.9 percent to $64.21 a
barrel in after-hours electronic trading on the New York Mercantile Exchange,
before paring its advance to $63.75 at 1:42 p.m. London time. The contract
expires at the end of the week. The more widely held June contract was little
changed at $66.34.
Oil rose earlier after the Organization of Petroleum Exporting
Countries, which produces about 41 percent of the world's oil, said producing
more crude wouldn't lower prices.
``Gasoline market fundamentals appear relatively bullish over the very
short term,'' OPEC said today in its monthly report. ``Given ample crude
supplies, it is clear that production would only serve to build crude oil
inventories and would not resolve the tightness in the downstream.''
Brent crude oil for June settlement fell 17 cents, or 0.3 percent, to
$68.80 a barrel in electronic trading on the ICE Futures exchange. It earlier
rose as much as 0.3 percent.
Nigerian Violence
At least 21 people were killed during state assembly elections in
Nigeria, a week before a presidential vote on April 21. The African country was
the fifth-largest exporter of oil to the U.S. last year.
``The Nigerian presidential election will take place this coming
weekend and had been pinpointed for many months now as one of the main
geopolitical risks of 2007,'' Olivier Jakob, the managing director at Zug,
Switzerland-based Petromatrix Gmbh, said today in a report.
Gasoline for May delivery traded for $2.1706 a gallon in after-hours
trading in New York after falling 0.6 percent to $2.1797 on April 13, the first
decline in four days.
Price Differences
Expressed in U.S. dollars, the price of West Texas Intermediate, the
U.S. benchmark crude, has fallen about 9 percent in 12 months. Oil has dropped
about 18 percent in euros, 19 percent in British pounds and 8 percent in yen.
The discount between Brent, traded in London, and West Texas
Intermediate widened to a record high this month as stockpiles at Cushing,
Oklahoma, where WTI is delivered, rose to about full capacity.
``Last week, we've seen this spread reach almost $7, which is
unprecedented and historic,'' said Thierry Lefrancois, an energy analyst with
Natixis in Paris. ``It raises the question of WTI as a benchmark for oil for
North America.''
Exxon Mobil Corp., the world's largest oil company, on April 13
reported a malfunction in a line connecting two units at its refinery in
Beaumont, Texas. Motiva Enterprises LLC, a refining venture between Europe's
Royal Dutch Shell Plc and Saudi Arabia's state oil company, reported on April
13 a malfunction at its plant in Port Arthur, Texas, that required emergency
flaring.
Valero Energy Corp., the largest refiner in the U.S., started two
units at its fire-damaged McKee plant in Texas, according to an April 13
report.
Gasoline deliveries by U.S. refiners usually peak between June and
August. High demand coincides with the North Atlantic hurricane season, which
runs from June 1 through November.
September is usually the busiest month for tropical storms, accounting
for about 37 percent of all hurricanes striking land in the U.S., according to
National Hurricane Center data.
OPEC Complies
Members of the OPEC have shown ``excellent'' compliance with output
quotas, Mohamed al-Hamli, OPEC's president and the oil minister of the United
Arab Emirates, said today at a conference in Dubai.
The 10 OPEC members that are subject to production quotas agreed to a
1.7 million-barrel-a-day cutback in output at meetings in October and December
to keep oil price around $60 a barrel.
Excluding Angola and Iraq, which have no quota, output from OPEC fell
by 66,800 barrels to 26.37 million barrels a day in March compared with
February, the group said.
OPEC's basket price, a weighted average of 11 blends produced by OPEC
nations, rose by $1.05 to $64.71 a barrel on April 13.
Hedge-fund managers and other large speculators increased their
net-long position in New York crude-oil futures in the week ended April 10,
according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered
short positions by 75,184 contracts on the New York Mercantile Exchange, the
commission said last week.
At the same time, commercial long positions fell by 60,529 contracts,
which could be the largest decline at least since 2003, according to
Petromatrix.
To contact the reporter on this story: Eduard Gismatullin in London at
[EMAIL PROTECTED]
Last Updated: April 16, 2007 08:48 EDT
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