Posted on 10/03/2005 6:17:53 PM PDT by Perdogg
Oil Prices Fall 77 Cents to $65.47 Per Barrel As Power Restored to Texas Refinery After Rita
Energy futures retreated Monday after power was restored to a large refinery in Texas and the Bush administration said it was, in principle, prepared to tap an emergency supply of heating oil in the Northeast.
But analysts said they did not expect fuel prices to fall sharply anytime soon because of the persistent supply constraints caused by back-to-back hurricanes.
In the aftermath of Katrina and Rita, a dozen refineries along the Gulf Coast remain closed, crimping gasoline and heating-oil production, and oil and natural gas output is far below normal levels. Under the circumstances, brokers said the decline in energy futures on Monday should not be seen as the start of a significant downtrend and they warned it could be merely a pause in a broader uptrend.
"I think it's more likely that this is probably a consolidation before the next move higher," said broker Tom Bentz of BNP Paribas [Brazilian] Commodity Futures.
Light sweet crude for November delivery on the New York Mercantile Exchange fell 77 cents to $65.47 per barrel. Also on Nymex, heating oil futures fell by 4.87 cents to $2.0809 per gallon and gasoline futures fell 3.46 cents to $2.0622 a gallon.
November Brent futures slipped 68 cents to settle at $62.80 per barrel on London's International Petroleum Exchange.
An Exxon Mobil Corp. refinery in Beaumont, Texas, is a step closer to processing 348,500 barrels a day of oil after Entergy Corp. said Monday that over the weekend it restored one of two power lines to the plant.
That still leaves seven other refineries in Texas out of service in the aftermath of Rita, and four off-line in Louisiana and Mississippi as a result of Katrina. Others are in the process of restarting but, combined, the losses add up to almost 3 million barrels a day of capacity, placing considerable strain on motor fuel supplies.
The retail price of gasoline climbed 12.5 cents last week to average $2.93 a gallon nationwide, or 99 cents higher than a year ago, the Energy Department said late Monday.
But with the home-heating season just around the corner, the market received an ounce of relief when Energy Secretary Samuel Bodman said the government was "prepared to do what is necessary with strategic reserves," in response to a question about the Northeast emergency heating oil supply.
Still, analysts said higher prices may be needed in the months ahead to attract fuel from abroad.
"The longer term outlook is bullish for prices going into the fourth quarter, with heating oil demand now being in focus," said Victor Shum, oil analyst at energy consultants Texas-headquartered Purvin & Gertz in Singapore.
The recovery of oil and natural gas output remains slow, with 93 percent of the Gulf of Mexico's crude production still shut and 75 percent of natural gas production down, according to the federal Minerals Management Service.
The loss of natural gas output is particularly troublesome, analysts say, because there is no emergency stockpile.
Natural gas futures have risen about 18 percent since Katrina hit, and are about 74 percent higher than they were two months ago. Natural gas futures rose 10.9 cents to $14.03 per 1,000 cubic feet on Monday.
"(With) a lot of questions concerning productive infrastructure in the Gulf still unanswered, it is difficult to envision any scenario right now that has prices retreating too far," said Mike Fitzpatrick of Fimat USA Inc. "Barring a miracle, don't look for much relief until spring."
Crude oil prices peaked at $70.85 briefly on Aug. 30, after Katrina made landfall. They remain about 30 percent higher than a year ago, when Hurricane Ivan disrupted oil production and refining in the Gulf.
Associated Press Writer Gillian Wong in Singapore contributed to this report.
Pump prices sure aren't falling.
A week ago I paid $1.69. Today I paid $1.93 and that lowest price around Jacksonville, most stations are at $2.99. So somehow I just knew that prices that go up fast, come down slowly. Someone is benefiting from this , and I know it is not me!
ratchet effect... kick it up 5 notches, but only drop it 1 or 2, Kick it up another 5 notches, only drop it 1 or 2....this helps condition us into paying higher prices....
Example, last year fuel was about 1.89 on average. I'd like that price allot today.... see... it works! I'm conditioned to be gouged. :)~
1.69!!!, 1.93!!! I'm moving to your city!!
You paid $1.93 for one U.S. gallon of unleaded gasoline today, and last week you paid $1.69?
Do you live in the U.S.? If so, how are you buying gasoline for less than the wholesale price per gallon?
Not much of a pull-back. Still crude price would not be in lock step with refinery output unless refinery capacity is really low and they just can't handle the present oil flow one way or another.
Canada estimates the sands will yield as much as 175 billion barrels of oil, making it second only to Saudi Arabia in crude oil reserves and enough to satisfy U.S. demand for at least a generation
Opps, me bad. Make that $2,69 a week ago. And $2.93. Dang if i did not have my senior moments and that stuff does not come up on the spell checker.LOL!
Okay --- I was curious how such low prices could be found.
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