Posted on 08/13/2004 10:15:58 AM PDT by klpt
Oil prices set new highs on Friday, underpinned by fresh evidence of strong Chinese demand, worries about sabotage in Iraq (news - web sites) and fears of unrest in Venezuela ahead of a weekend referendum on the rule of President Hugo Chavez.
News of an explosion at the U.S. Whiting, Indiana refinery spiked U.S. light crude futures to a record $45.93 a barrel on the New York Mercantile Exchange. London Brent set a record $43 a barrel, up 71 cents.
BP said a blast at the 420,000-barrel-a-day plant, the nation's third biggest, had closed a processing unit. U.S. oil demand growth is running at 3.5 percent so far this year and U.S. refinery bottlenecks are a prime factor behind this year's oil price surge. Crude is up more than $10 a barrel since the start of the year.
Prices have hit new records in all but one of the last 11 trading sessions, buoyed by world demand growth that is running at the fastest rate in 24 years and on concerns about stretched world production capacity.
"None of the fears about supply have gone away and demand growth shows no sign of slowing," said independent London oil analyst Geoff Pyne. "That makes it a difficult market to sell."
China on Friday said crude imports into the world's second biggest consumer held strong in July at growth rate of 40 percent over July 2003. China's crude imports averaged 2.49 million barrels a day in the first seven months of 2004, also up 40 percent compared to the matching period last year, the official Xinhua news agency said.
The import figures suggest China's demand for oil has not been dented yet by Beijing's efforts to rein in its strongly growing economy, or by high prices.
Chinese officials say high refinery runs to meet domestic demand by state oil company Sinopec continue to attract heavy crude imports.
"Sinopec had planned higher second-half refinery production versus the first half, which means high crude imports will stay," said an official with China's top oil refinery Zhenhai Refining & Chemical Co Ltd.
Iraqi oil exports flowed normally from the country's southern fields to offshore terminals after pumping resumed through a main pipeline sabotaged on Monday, an official from Iraq's South Oil Company said.
But traders worry that Iraqi rebels loyal to Shi'ite Muslim cleric Moqtada al-Sadr will attack oil infrastructure after U.S. forces stormed the holy city Najaf to quell a week-long uprising by Sadr supporters.
There were also concerns that Sunday's referendum in Venezuela may lead to violence if Chavez is defeated, and put the country's oil shipments at risk.
"Anything less than a clear answer will likely perpetuate the country's political turmoil," Washington consultants PFC Energy said in a report.
Energy Minister Rafael Ramirez gave reassurances on Thursday that Caracas would guarantee supplies to the world market whatever the outcome of the vote.
Uncertainty also remains over oil exports from Russia's YUKOS, which continues to battle bankruptcy but has so far avoided any disruption to its 1.7 million bpd of production.
U.S. production in the Gulf of Mexico was cut back this week due to a tropical storm, while government data showed a hefty and unexpected drop in national crude inventories.
Any more news on this "Blast"?
The response is daft, and demonstrates that the traders don't understand their market.
Reduced refinery capacity should DROP crude futures. It should raise futures for finished products.
Ok, explain the market forces to me that cause the price of crude to go up because a processor is shut down.
"News of an explosion at the U.S. Whiting, Indiana refinery spiked U.S. light crude futures to a record $45.93 a barrel on the New York Mercantile Exchange."
Hmmm... I guess I don't understand something. Isn't a refinery a light crude consumer? If anything, taking one offline should cause light crude prices to go down.
$45.55 right now
Producers saw an excuse, however limp, to raise prices?
Nothing to see here. Trees touched a power line. Forests burn all the time. Computer error. Underinvestment in infrastructure. Moose. Cheese. Derailments are common....
"Ok, explain the market forces to me that cause the price of crude to go up because a processor is shut down."
It is called "any reason we can think of to raise the price of oil."
The (ENRON) INTERNATIONAL OIL REFINERY SCAM.....$$$$$$$$$$$$$$$
ping.
"Producers saw an excuse, however limp, to raise prices?"
The summer time "refinery fire" price-adjusting tactic is a great American tradition!
However, the DIRECTION of crude prices, in and of themselves, is hardly ever a function of product. Crude historically has always run up as time winds down before an inflection point, an important S/D development -- and the Chavez referendum is just such an event, or rather, the result to come post-referendum is.
Also, don't ignore the shipping delays for cargoes affected by Charley; these will affect API/EIA figures over the next couple of weeks, and will unquestionably be a bullish factor as to price. The mkts (hence traders, by definition) are doing their job very nicely, to wit, acting as an anticipatory discounting mechanism.
I hope the White Castle on Indianapolis Ave is OK.
Another coincidence.
The U.S. has averaged 4.1 refinery fires/explosions per year since 1988. Check out the TOTAL lost production estimates. Yawn.
In other news, the DemocRats contnue to oppose any new drilling anywhere.
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