Rallying gasoline futures sure to lift prices at pump
WASHINGTON -- Gasoline futures surged another 7 percent yesterday on word of a large refinery snag, contributing to an almost 50-cent-per-gallon increase over the last month that is sure to send pump prices higher.
''We are looking at retail prices that will soon be above $2.50 gallon nationally, and could perhaps eclipse the $2.60 per gallon" level, said analyst Tom Kloza at Wall, N.J.-based Oil Price Information Service.
The average retail price of unleaded gasoline was $2.37 a gallon last week -- the highest level since November, the Energy Department said.
Gasoline futures rose 12.27 cents to $1.866 a gallon on the New York Mercantile Exchange. Brokers said the rally was sparked after Amerada Hess Corp. said yesterday that it unexpectedly shut down part of a refinery in St. Croix that it owns with Petroleos de Venezuela SA over the weekend. A spokesman said repairs to the unit, which refines roughly 150,000 barrels of crude per day, could take up to two weeks.
''I don't think anybody was expecting to see that at the start of the day," said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York. ''The gasoline market has been pretty strong recently anyway because we're getting into the peak turnaround season."
The so-called turnaround season is when refiners shut down plants for maintenance ahead of summer, traditionally the busiest period for gasoline production. It often causes supplies to tighten and prices to rise.
Prices also rose on analysts' forecasts that a government report to be released tomorrow will show that gasoline inventories fell from a week ago.
Light sweet crude for April delivery rose $1.33 to $63.10 a barrel on the Nymex. On London's ICE Futures exchange, crude futures rose $1.71 to $63.91 per barrel.
Meanwhile, the International Energy Agency, a watchdog for the world's energy consumers, lowered its 2006 estimate for oil demand by 290,000 barrels per day because of persistently high fuel prices and slowing consumption in Southeast Asia.
Nymex oil prices had surged $1.81 on Monday to $61.77 on nagging concerns about unrest in Nigeria and the possibility of UN sanctions against Iran for its nuclear ambitions.
In Nigeria, recent attacks by militants on pipelines and oil facilities have lowered production by about 400,000 barrels a day.
''We would expect the potential for further chaos in Nigeria to provide a floor for prices around $60 a barrel, and we expect Nigeria will continue to be a major issue in terms of supply security up to, and probably beyond, next year's elections," wrote Barclays Capital's analysts in a research note.
